Forest Service
Better Planning, Guidance, and Data Are Needed to Improve Management of the Competitive Sourcing Program Gao ID: GAO-08-195 January 22, 2008Competitive sourcing is aimed at promoting competition between federal employees and the private sector as a way to improve government operations. Key work activities--those that are either inherently governmental or core to the agency's mission--are generally exempt from competitions. In fiscal year 2004, Congress began placing spending limitations on the Forest Service's competitive sourcing program because of concerns about how the program was managed. Also, like other agencies, the Forest Service must report annually to Congress on the savings achieved from any competitions it conducted. GAO was asked to determine the extent to which the Forest Service has (1) plans and guidance to help implement its competitive sourcing program effectively and (2) sufficient cost data to ensure that it complied with its spending limitations and accurately reported its savings to Congress for fiscal years 2004 through 2006. To answer these objectives, GAO examined the agency's strategic plan, guidance, and available cost data for competitive sourcing and interviewed key agency officials.
The U.S. Department of Agriculture's Forest Service lacks a realistic strategic plan and adequate guidance to help ensure that it can effectively implement its competitive sourcing program. For example, the Forest Service's current strategic plan is unrealistic because it does not take into account the likely availability of personnel and funding resources needed to implement the plan. Furthermore, the Forest Service lacks sufficient guidance on identifying key work activities that should be excluded from competitions. Although Forest Service officials do not believe that inappropriate work activities have been included in competitions that it has held, without clear guidance the Forest Service remains at risk of doing so. The agency also lacks a strategy on how to assess the cumulative effect that competitions could have on its ability to fight wildland fires and respond to other emergencies. Outsourcing a large number of federal jobs to the private sector could, over time, reduce the number of available responders. For fiscal years 2004 through 2006, the Forest Service lacked sufficiently complete and reliable cost data to (1) demonstrate its compliance with statutory spending limitations on its competitive sourcing activities and (2) accurately report competitive sourcing savings to Congress. Regarding compliance with spending limitations, the Forest Service did not collect cost data on all activities related to competitive sourcing because it believed that some costs were not subject to the limitations. For example, the Forest Service did not collect data on employees' salaries related to studying the feasibility of conducting a competition--a key component of its competitive sourcing process. GAO has interpreted the statutory spending limitations to generally apply to all costs attributable to the Forest Service's competitive sourcing program. Moreover, because the Forest Service's cost data used to determine compliance with statutory spending limitations were not reliable, the Forest Service cannot know if it exceeded the limitations. Regarding the savings achieved from its competitions, the Forest Service reported to Congress a savings totaling over $38 million between fiscal years 2004 and 2006. However, the Forest Service could not provide GAO with sufficient data or the methodology it used to calculate savings derived from competitions. In addition, GAO found that the Forest Service did not consider certain costs, which were substantial, in its savings calculations. As a result, Congress may not have an accurate measure of the savings from the Forest Service's competitive sourcing competitions during this period.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-08-195, Forest Service: Better Planning, Guidance, and Data Are Needed to Improve Management of the Competitive Sourcing Program
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
January 2008:
Forest Service:
Better Planning, Guidance, and Data Are Needed to Improve Management of
the Competitive Sourcing Program:
GAO-08-195:
GAO Highlights:
Highlights of GAO-08-195, a report to congressional requesters.
Why GAO Did This Study:
Competitive sourcing is aimed at promoting competition between federal
employees and the private sector as a way to improve government
operations. Key work activities”those that are either inherently
governmental or core to the agency‘s mission”are generally exempt from
competitions. In fiscal year 2004, Congress began placing spending
limitations on the Forest Service‘s competitive sourcing program
because of concerns about how the program was managed. Also, like other
agencies, the Forest Service must report annually to Congress on the
savings achieved from any competitions it conducted.
GAO was asked to determine the extent to which the Forest Service has
(1) plans and guidance to help implement its competitive sourcing
program effectively and (2) sufficient cost data to ensure that it
complied with its spending limitations and accurately reported its
savings to Congress for fiscal years 2004 through 2006. To answer these
objectives, GAO examined the agency‘s strategic plan, guidance, and
available cost data for competitive sourcing and interviewed key agency
officials.
What GAO Found:
The U.S. Department of Agriculture‘s Forest Service lacks a realistic
strategic plan and adequate guidance to help ensure that it can
effectively implement its competitive sourcing program. For example,
the Forest Service‘s current strategic plan is unrealistic because it
does not take into account the likely availability of personnel and
funding resources needed to implement the plan. Furthermore, the Forest
Service lacks sufficient guidance on identifying key work activities
that should be excluded from competitions. Although Forest Service
officials do not believe that inappropriate work activities have been
included in competitions that it has held, without clear guidance the
Forest Service remains at risk of doing so. The agency also lacks a
strategy on how to assess the cumulative effect that competitions could
have on its ability to fight wildland fires and respond to other
emergencies. Outsourcing a large number of federal jobs to the private
sector could, over time, reduce the number of available responders.
For fiscal years 2004 through 2006, the Forest Service lacked
sufficiently complete and reliable cost data to (1) demonstrate its
compliance with statutory spending limitations on its competitive
sourcing activities and (2) accurately report competitive sourcing
savings to Congress. Regarding compliance with spending limitations,
the Forest Service did not collect cost data on all activities related
to competitive sourcing because it believed that some costs were not
subject to the limitations. For example, the Forest Service did not
collect data on employees‘ salaries related to studying the feasibility
of conducting a competition”a key component of its competitive sourcing
process. GAO has interpreted the statutory spending limitations to
generally apply to all costs attributable to the Forest Service‘s
competitive sourcing program. Moreover, because the Forest Service‘s
cost data used to determine compliance with statutory spending
limitations were not reliable, the Forest Service cannot know if it
exceeded the limitations. Regarding the savings achieved from its
competitions, the Forest Service reported to Congress a savings
totaling over $38 million between fiscal years 2004 and 2006. However,
the Forest Service could not provide GAO with sufficient data or the
methodology it used to calculate savings derived from competitions. In
addition, GAO found that the Forest Service did not consider certain
costs, which were substantial, in its savings calculations. As a
result, Congress may not have an accurate measure of the savings from
the Forest Service‘s competitive sourcing competitions during this
period.
What GAO Recommends:
GAO is recommending that the Secretary of Agriculture direct the Chief
of the Forest Service to take certain management steps to improve its
competitive sourcing program. In commenting on a draft of this report,
the Forest Service generally agreed with GAO‘s recommendations.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.GAO-08-195]. For more information, contact Robin
M. Nazzaro at (202) 512-3841 or nazzaror@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
The Forest Service Does Not Have a Realistic Strategic Plan or Adequate
Guidance to Effectively Implement Its Competitive Sourcing Program:
The Forest Service Does Not Have Sufficient Competitive Sourcing Cost
Data to Demonstrate Compliance with Its Statutory Spending Limitations
or to Accurately Report Savings to Congress:
Conclusions:
Recommendations for Executive Action:
Agency Comments:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Limitations on Use of Appropriations for "Competitive
Sourcing Studies and Related Activities"
Appendix III: Comments from the Forest Service:
Appendix IV: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Forest Service's Completed Competitions, Fiscal Years 2004-
2006:
Table 2: Forest Service's Schedule for Conducting Feasibility Studies
and the Studies' Status as of September 30, 2007:
Table 3: USDA OCFO Guidance for Conducting Competitive Sourcing
Feasibility Studies:
Table 4: Percentages of Inherently Governmental and Core-Commercial
Activities Identified by the Forest Service Compared with the
Percentages Reported in the OMB-Approved FAIR Act Inventories, Fiscal
Years 2004-2006:
Figure:
Figure 1: OMB Calculation for Determining Savings from Competitions,
Fiscal Years 2004-2006:
Abbreviations:
CSO: competitive sourcing officer:
CSPO: Competitive Sourcing Program Office:
FFIS: Federal Financial Information System:
FTE: full-time-equivalent staff:
ICS: Incident Command System:
IT: information technology:
MEO: Most Efficient Organization:
NWCG: National Wildfire Coordinating Group:
OCFO: Office of the Chief Financial Officer:
OMB: Office of Management and Budget:
PWS: performance work statement:
USDA: U.S. Department of Agriculture:
[End of section]
United States Government Accountability Office: Washington, DC 20548:
January 22, 2008:
Congressional Requesters:
The 2001 President's Management Agenda includes a governmentwide
initiative--known as competitive sourcing--that aims to improve
government efficiency and reduce the costs of government programs by
promoting competition between federal employees and private sector
organizations[Footnote 1]. The competitions determine who should
perform commercial activities--activities performed by the government
that are also regularly performed in the commercial marketplace, such
as information technology (IT), maintenance and property management,
and logistics. These competitions compare the public and private sector
costs of performing an activity and may result in outsourcing federal
jobs to the private sector. In its competitive sourcing strategic plan,
known as the Green Plan, the Forest Service, an agency within the U.S.
Department of Agriculture (USDA), sets forth the agency's goal to
conduct 14 precompetition studies in 5 years to evaluate the
feasibility of subjecting nearly two thirds of its total workforce to
competitive sourcing competitions.
The Forest Service manages about 193 million acres of land--about 30
percent of all federal lands--and has a workforce of about 37,000 full-
time-equivalent staff (FTE). The employees are geographically dispersed
throughout the nation. In addition to its headquarters in Washington,
D.C., the Forest Service has 9 regional offices, 155 forest offices,
and about 600 district offices.
The Forest Service's competitive sourcing program is subject to the
requirements of the Office of Management and Budget's (OMB) Circular
No. A-76 (the circular) and the Federal Activities Inventory Reform Act
of 1998 (the FAIR Act).[Footnote 2] Generally, the circular sets forth
the competitive process an agency must follow to determine whether
federal employees or private sector organizations should perform a
commercial activity. The competitive process can be divided into three
stages: (1) a precompetition planning stage that, among other things,
determines the scope of the competition; (2) a competition stage that
begins with a public announcement of a competition and ends with the
selection of the competition's winner; and (3) a postcompetition
accountability stage, which involves such activities as monitoring and
reporting on the winner's performance. The circular also directs
agencies to create a staffing plan--which creates an organization of
agency employees that is known as the "Most Efficient Organization"
(MEO)--to be used to represent the agency in the competition. After
allowing for a transition period, the winner of the competition,
whether the MEO or a private sector organization, is subject to the
provisions of the postcompetition accountability stage.
The FAIR Act, as implemented by the circular, requires federal agencies
to compile and submit to OMB for approval an annual inventory of the
activities their employees perform. The inventory must include the
number of FTEs that perform each activity and designate whether the
activity is inherently governmental or commercial. Inherently
governmental activities--such as setting policy or spending funds--are
critical to the role and function of government and, therefore, are
exempt from competition with the private sector. In contrast,
commercial activities--those that are not inherently governmental and
could be performed by the private sector--are subject to competitive
sourcing competitions, unless the agency exempts the activity. The
agency may still exempt a commercial activity if, for example, it deems
the activity to be core to the agency's mission (referred to as core-
commercial).
In addition, the Consolidated Appropriations Act, 2004, requires
executive agencies to report annually to Congress on competitive
sourcing activities.[Footnote 3] Among other things, the act requires
agencies to report actual savings derived from implementing a
competitive sourcing competition. While the act does not provide
direction on how to calculate actual savings, OMB does provide this
direction through annual guidance.[Footnote 4] The Forest Service,
through USDA, reported to Congress that it saved over $38 million in
fiscal years 2004 through 2006 as a result of competitive sourcing
competitions.
Because of concerns about how the Forest Service was managing its
competitive sourcing program, Congress limited the funds that the
Forest Service could spend on competitive sourcing activities during
fiscal years 2004 through 2007. In fiscal year 2004, the spending
limitation was $5 million; in fiscal year 2005, it was $2 million; in
fiscal year 2006, it was $3 million; and in fiscal year 2007, it was
also $3 million.[Footnote 5] The Forest Service initiated 171
competitions in fiscal years 2002 and 2003, and it has acknowledged
that this first experience with the competitive sourcing initiative
fell short of expectations. For example, a congressional study noted
that nearly half of these competitions involved three or fewer FTEs,
and that, as a result, Forest Service officials acknowledged that the
competitions were unrealistic, adding that holding competitions
involving few FTEs often made it impossible for private sector
organizations to compete effectively.[Footnote 6] Two of the most
important lessons the Forest Service believes it has learned from this
experience are that it should (1) centralize responsibilities for
competitions to increase control and oversight and (2) plan
competitions better by, for example, identifying the appropriate scope
of the competition.
The Forest Service has taken steps to improve the management of its
competitive sourcing program in both of these areas. In fiscal year
2003, it strengthened headquarters' oversight of competitive sourcing
competitions. In fiscal year 2004, USDA issued guidance directing the
Forest Service to perform studies to assess the feasibility of
conducting a competition--known as feasibility studies--before
committing to a competition. Although not required by the circular,
feasibility studies are conducted during the precompetition planning
stage and help determine whether to compete an activity. Also, some of
the steps required by the circular during the precompetition planning
stage are completed as part of the study. In fiscal years 2004 through
2006, the Forest Service completed three feasibility studies. They were
for communications activities (completed June 2005), the Geospatial
Service and Technology Center (completed April 2006)[Footnote 7], and
fleet management activities (completed May 2006). During this time
frame, the Forest Service also completed three competitions, all begun
in 2003 and completed in 2004. They were the IT competition (1,200
FTEs, completed July 2004); the fleet maintenance competition (57 FTEs,
completed January 2004); and the road maintenance competition (66 FTEs,
completed January 2004[Footnote 8]).:
As with the management of its competitive sourcing program in fiscal
years 2002 and 2003, the Forest Service's most recent competitive
sourcing activities have raised questions about whether the program is
being effectively managed. In this context, you asked us to determine
the extent to which the Forest Service has (1) plans and guidance to
help implement its competitive sourcing program effectively and (2)
sufficient cost data to ensure that it complied with its competitive
sourcing statutory spending limitations and accurately reported its
competitive sourcing savings to Congress for fiscal years 2004 through
2006.
To address these two objectives, we focused on the Forest Service's
competitive sourcing activities between fiscal years 2004 through 2006.
For the first objective, we examined the Forest Service's Green Plan
and how the Forest Service scoped the three competitions it completed
during this period. In doing so, we collected and reviewed pertinent
OMB, USDA, and Forest Service guidance and documentation, including
documentation related to the three completed competitions. In addition,
we interviewed Forest Service officials familiar with the agency's
competitive sourcing activities to better understand implementation of
the program. For the second objective, we examined the appropriations
acts for fiscal years 2004 through 2006 to determine which costs
incurred by the Forest Service during that period were subject to the
spending limitations. We obtained available Forest Service cost data
for activities associated with its competitive sourcing program. We
assessed the reliability of these data and found them unreliable as a
measure of the costs and savings associated with the program. We
conducted our work between October 2006 and January 2008 in accordance
with generally accepted government auditing standards. See appendix I
for a more detailed description of our objectives, scope, and
methodology.
Results in Brief:
The Forest Service lacks a realistic strategic plan and adequate
guidance to help ensure that it can effectively implement its
competitive sourcing program. Specifically, the Forest Service's Green
Plan does not identify the personnel and funding resources that are
likely to be available to implement the plan. These personnel and
resource demands are likely to be substantial because the plan proposes
to subject all commercial activities--affecting about two thirds of the
agency's FTEs--to feasibility studies. This includes a single "catch-
all" feasibility study covering 15,000 FTEs that was not included in a
draft of the Green Plan because the activities associated with these
FTEs did not satisfy the Forest Service's initial screening criteria
for identifying good candidates for feasibility studies. The Forest
Service added the additional "catch-all" feasibility study to its Green
Plan because it was directed by USDA to schedule feasibility studies
for all eligible FTEs without taking into account resource
considerations. Furthermore, although the Forest Service identified
inherently governmental and core-commercial activities in its annual
FAIR Act inventories, Forest Service officials responsible for planning
the three competitions completed in fiscal year 2004 did not find the
inventory data useful for identifying and exempting those activities
because, among other things, the officials believed that the
classifications used in the FAIR Act inventories did not capture the
actual work activities Forest Service employees carried out. Although
the officials said they received little guidance on how to supplement
the FAIR Act inventories or how to identify inherently governmental and
core-commercial activities, they do not believe that these
inappropriate activities were included in the competitions because of
the relatively small size and clearly commercial nature of these
competitions. However, without clear guidance, and in light of its
plans to examine the activities of two thirds of its workforce, we
believe that the agency is at risk of subjecting inherently
governmental and core-commercial activities to future competitive
sourcing competitions. In addition, the Forest Service lacks a strategy
on how to assess the cumulative effect that competing activities could
have on its ability to fight wildland fires and respond to other
emergencies. Forest Service employees play a prominent role in the
nation's ability to fight wildland fires and respond to emergencies.
Outsourcing substantial numbers of Forest Service jobs to the private
sector could, over time, reduce this ability.
For fiscal years 2004 through 2006, we found that the Forest Service
lacked sufficiently complete and reliable cost data to (1) demonstrate
its compliance with appropriations acts' spending limitations on its
competitive sourcing activities and (2) accurately report competitive
sourcing savings to Congress. Regarding compliance with the statutory
spending limitations, the Forest Service did not collect cost data on
all activities related to competitive sourcing because it interpreted
the legislation narrowly--believing that some costs were not subject to
the spending limitations. For example, the Forest Service did not
collect data on the cost of employee salaries related to feasibility
studies--a key component of its competitive sourcing process. However,
in our view, the appropriations acts' spending limitations, with one
exception, apply to all costs attributable to the Forest Service's
competitive sourcing program--including, for example, the costs of
salaries related to feasibility studies. The one exception to the
spending limitations is the cost of activities incurred to carry out
the FAIR Act, such as preparing inventories, because this act requires
the Forest Service to perform these activities even in the absence of
other competitive sourcing activities. (See app. II for our full legal
interpretation.) Moreover, the Forest Service failed to ensure the
reliability of the cost data that it did collect to determine
compliance with statutory spending limitations. As a result, the Forest
Service cannot know if it exceeded the appropriations acts' spending
limitations, even using its own narrow interpretation of which costs
are subject to the spending limitations. Regarding savings reported to
Congress, the Forest Service could not provide us with sufficient data
or the methodology it used to calculate savings derived from
competitions, and, as a result, we could not verify the accuracy of the
reported savings. In addition, we found that the Forest Service did not
consider certain substantial costs in its savings calculations, and
thus Congress may not have an accurate measure of the savings produced
by the Forest Service's competitive sourcing competitions. Although OMB
provides guidance on how to calculate the savings, the guidance does
not specify all of the costs that should be included in the
calculations, thus providing the Forest Service with some discretion on
which costs to include. Some of the costs the Forest Service did not
include in the calculations substantially reduce or even exceed the
savings reported to Congress. For example, regarding the IT
infrastructure competition, the Forest Service did not include the $40
million that it cost to make the transition to the MEO. This amount is
$5 million more than the $35 million in savings that the agency
reported to Congress.
We are recommending that the Secretary of Agriculture direct the Chief
of the Forest Service to improve how the agency manages its competitive
sourcing program to help ensure that it has a realistic strategic plan,
excludes inappropriate activities from competitive sourcing
competitions, maintains its capacity to respond to wildland fires, and
has the cost data necessary to comply with appropriations acts'
spending limitations and to accurately report savings to Congress. In
commenting on a draft of this report, the Forest Service generally
agreed with our recommendations but had concerns about some of the
specific findings and conclusions in the report. The agency's concerns
and our responses to them are presented in appendix III.
Background:
The Forest Service's mission includes sustaining the nation's forests
and grasslands, managing the productivity of those lands for the
benefit of citizens, conserving open space, enhancing outdoor
recreation opportunities, and conducting research and development. To
help fulfill its mission, the Forest Service devotes considerable
resources to suppressing wildfires. To coordinate the firefighting
efforts of the Forest Service and other federal land management
agencies, the interagency National Wildfire Coordinating Group (NWCG)
was established.[Footnote 9] This group adopted an interagency incident
command system (ICS) and firefighting standards for responding to
wildland fires. Federal employees in the land management agencies
assume specific roles within the ICS, a command structure used at all
levels of government and organized around five primary functional
areas: command, operations, planning, logistics, and finance and
administration.
There are about 80,000 federal employees and retirees who mobilize to
assist state and local organizations to fight fires and respond to
national emergencies as needed. These employees must receive
standardized training and be certified in specific ICS duties (e.g.,
communications, aircraft management, and dispatch) before being
available to respond to wildfires and other emergencies.
Approximately 30,000 permanent Forest Service employees are ICS-
certified, with 10,000 to 12,000 of these employees holding fire-
related positions. The remaining 18,000 to 20,000 employees are part of
the "Forest Service militia." These are employees who are ICS-certified
to fight fires but for whom the militia duty is a volunteer, collateral
duty. These militia members will often leave their primary work duties
and travel to the incident scene to provide assistance. A militia
member may typically spend between 1 to 3 weeks each year fighting
wildfires and responding to emergency situations. Militia teams that
assisted the Federal Emergency Management Agency following Hurricane
Katrina logged as many as 60 to 90 days of duty. As part of their
militia duties, Forest Service employees often perform activities
related to their regular work duties. For example, when responding to a
wildfire, an employee whose regular duties involve IT support might
provide this support at the scene of the fire. Employees may also
perform militia duties that are unrelated to their regular work duties.
For example, an IT employee who is ICS-certified in logistics might be
responsible for providing food, supplies, and equipment at the scene of
a fire.
Competitive Sourcing Policy and Process:
The federal government has had a long-standing acquisition policy that,
when permissible and cost-effective, agencies are to rely on the
private sector to perform activities that are regularly performed in
the commercial marketplace, such as IT, maintenance and property
management, and logistics. This policy was laid out in OMB's 1966
Circular No. A-76, which was last revised in 2003.[Footnote 10] The
circular's stated goal is to obtain maximum value for taxpayers'
dollars by taking advantage of competitive forces. This policy,
described in the 2001 President's Management Agenda as competitive
sourcing, is one of five governmentwide initiatives intended to improve
the federal government's management and performance so that resources
entrusted to the federal government are well managed and used
wisely.[Footnote 11] In addition, the circular provides agency
management with a structured process to compare the public and private
sector costs of performing an activity and to select the lowest cost
provider through competition. This comparison may result in outsourcing
federal jobs to the private sector.
The first step toward competitive sourcing is identifying work
activities that are suitable for competition. The FAIR Act, as
implemented by the circular, requires federal agencies to annually
inventory all of the activities that federal employees perform--the
FAIR Act inventory. For the inventory, activities are classified as
inherently governmental or commercial. Specifically:
* Inherently governmental activities are those activities that are so
intimately related to the public interest that they require performance
by federal government employees.[Footnote 12] The circular exempts
these activities from competition.
* Commercial activities are those that are not inherently governmental
and could be performed by the private sector. Commercial activities
listed in the FAIR Act inventory are subject to the competition process
detailed in the circular, unless they are placed in a subcategory of
commercial activities that are exempt from competition.
* Core-commercial activities are those in a subcategory of commercial
activities that are identified to be essential, or "core," to the
agency's mission.[Footnote 13] The circular allows agencies to exempt
these activities from competition with sufficient written
justification.[Footnote 14]
To determine whether federal employees or private sector organizations
should perform commercial activities, the circular establishes the
following three-stage competitive process (referred to as an A-76
competition):
* A precompetition planning stage that, among other things, determines
the scope of the competition. In this stage, the agency determines the
commercial activities to be competed and the precompetition cost to
perform that activity. It also appoints competition officials who will
be in charge of developing, for example, the performance work statement
(PWS), which specifies the work to be performed by the winning bidder.
In addition, agency officials unaffiliated with the PWS create the MEO,
which is generally a smaller, streamlined version of the government
organization that is currently doing the work.
* A competition stage that begins with a public announcement of a
competition and ends with the selection of the competition's winner.
During this stage, an agency develops and issues a solicitation,
receives offers, and follows a process to select the winning bidder.
* A postcompetition accountability stage that involves such activities
as monitoring and reporting on the winner's performance, whether that
winner is the MEO or a private sector organization.
The circular also directs agencies to designate a competitive sourcing
official (CSO) with responsibility for implementing the circular who,
with certain exceptions, may delegate those responsibilities to other
officials in the agency. USDA designated its Chief Financial Officer as
its CSO. He and his office, the Office of the Chief Financial Officer
(OCFO), provide oversight to USDA and its agencies, including the
Forest Service.
In 2002, the Forest Service established the Competitive Sourcing
Program Office (CSPO) in its headquarters. The CSPO oversees the
preparation of the FAIR Act inventory and provides written guidance to
employees throughout the agency. In 2003, competitive sourcing
responsibilities were further centralized in the CSPO to include
oversight of A-76 competitions and postcompetition reporting.
Supporting the CSPO are regional, national forest, and district office
staffs.
Forest Service Green Plans and Feasibility Studies:
OMB requires that agencies develop a strategic plan--known as a Green
Plan--for implementing their competitive sourcing programs.[Footnote
15] OMB's guidance on how to develop a Green Plan describes it as a
long-range plan to ensure that competitive sourcing is a carefully and
regularly considered option for improving the cost-effectiveness and
quality of an agency's commercial activities. According to the
guidance, agencies should include in the plan a description of how they
are going to take timely and effective advantage of competition, a list
of activities being announced for competition, an overview of their
decision-making process, and a strategy to limit potential constraints
on competition. The guidance also requires that agencies update their
plans as organizational conditions change. To comply, the Forest
Service has periodically submitted its Green Plan to USDA for
incorporation into the department-level Green Plan, which is then
presented to OMB for approval. Since December 2003, the Forest Service
has submitted at least five versions of its Green Plan to USDA. The
Forest Service's most recent OMB-approved Green Plan was issued in
December 2005 and covers fiscal years 2005 through 2009.
In its Green Plan, the Forest Service proposes conducting a series of
competitive sourcing feasibility studies before holding A-76
competitions. Feasibility studies enable an agency to first examine the
practicality of subjecting activities to a competition before
committing to one. OMB recognizes the value of this step and has
recommended in its guidance that agencies conduct feasibility studies
to streamline the competitive sourcing process. The OCFO issued
guidance in May 2004 on conducting feasibility studies that outlined
USDA agencies' responsibilities and specific procedures to be followed
during a feasibility study.
The Forest Service typically assembles a team of six to eight employees
to conduct a feasibility study. Each study usually involves one or more
requests for data from field offices, which may require information
from several hundred Forest Service employees. In addition to
recommending whether to proceed with an A-76 competition, a Forest
Service feasibility study can make other recommendations, such as to
reorganize the way in which the Forest Service performs the activity
being studied without engaging in an A-76 competition. When the
feasibility study is completed, the Chief of the Forest Service reviews
the study team's report and recommendations and decides on the best
course of action, which may or may not be an A-76 competition.
In fiscal years 2004 through 2006, the Forest Service completed three A-
76 competitions (see table 1).
Table 1: Forest Service's Completed Competitions, Fiscal Years 2004-
2006:
Activity: Information technology infrastructure;
FTEs: 1,200;
Winner announcement date: July 2004;
Competition winner: MEO.
Activity: Fleet maintenance;
FTEs: 57;
Winner announcement date: January 2004;
Competition winner: Private sector contractor.
Activity: Road maintenance;
FTEs: 66;
Winner announcement date: January 2004;
Competition winner: MEO.
Source: USDA.
[End of table]
Competitive Sourcing Reporting Requirements and Spending Limitations:
The Consolidated Appropriations Act, 2004, requires executive agencies,
such as USDA, to report to Congress on their competitive sourcing
activities for the prior fiscal year, including the total number of
competitions announced and completed; the incremental costs directly
attributable to conducting these competitions; and the total savings
actually, or estimated to be, derived from such competitions. As an
agency within USDA, the Forest Service must report this information to
USDA for inclusion in USDA's report to Congress.
Congress also limited the Forest Service's funds available for
"competitive sourcing studies and related activities" in each year's
appropriations act for fiscal years 2004 through 2007, because of
concerns about how the Forest Service had implemented its competitive
sourcing initiative. Specifically, the spending limitations were $5
million (fiscal year 2004), $2 million (fiscal year 2005), $3 million
(fiscal year 2006), and $3 million (fiscal year 2007).[Footnote 16]
The Forest Service Does Not Have a Realistic Strategic Plan or Adequate
Guidance to Effectively Implement Its Competitive Sourcing Program:
The Forest Service lacks a realistic strategic plan and adequate
guidance to help ensure that it can effectively and efficiently
implement its competitive sourcing program. Specifically, the Forest
Service's Green Plan proposes to subject all commercial activities to
feasibility studies without identifying the personnel and funding
resources that are likely to be available for the studies. Furthermore,
Forest Service officials responsible for planning the three
competitions completed in fiscal year 2004 told us that they did not
find the FAIR Act inventory data useful for identifying and exempting
inherently governmental and core-commercial activities, and that they
received little guidance on how to supplement the inventory data or how
to identify inherently governmental and core-commercial activities
without using the inventory data. Nevertheless, Forest Service
officials told us that the lack of guidance did not result in competing
inherently governmental and core-commercial activities because of the
small size and commercial nature of these competitions. However,
without clear guidance, we believe that the agency risks subjecting
inherently governmental and core-commercial activities to future A-76
competitions. In addition, the Forest Service does not have a strategy
on how to assess the cumulative effect that competing activities could
have on its ability to fight wildland fires and respond to other
emergencies, even though outsourcing a large number of federal jobs to
the private sector could reduce the availability of certified
responders in the long term.
The Forest Service's Strategic Plan for Managing Its Competitive
Sourcing Program Is Not Realistic:
The Forest Service's December 2005 Green Plan for managing its
competitive sourcing program is not realistic because it does not take
into account the personnel and funding resources that are likely to be
available to implement the plan, even though it proposes to subject all
commercial activities--performed by approximately 24,500 FTEs--to
feasibility studies during fiscal years 2005 through 2009. This is a
significant increase over the activities it proposed to study in a
draft of this plan issued 5 months earlier in July 2005. The July 2005
draft Green Plan scheduled 13 feasibility studies for activities
associated with 6,180 FTEs for fiscal years 2005 through 2009. The
Forest Service selected these activities by identifying good candidates
for feasibility studies and then selecting a level of effort the
officials believed could be managed over the next 5 years. For example,
in selecting the studies, the officials said they considered the
complexity of the studies, the additional workload that would result
from conducting them, and the personnel resources required in selecting
these activities. The Forest Service used the following nine criteria
as the basis for identifying good candidates for feasibility studies:
* Potential for savings. An activity with greater potential for savings
through more effective or efficient performance is considered a
stronger candidate for a feasibility study.
* Availability of private sector contractors. An activity performed by
a large number of commercial companies is considered a stronger
candidate for a feasibility study.
* Severability. An activity that can be performed by an independent
business unit is considered a stronger candidate for a feasibility
study.
* Preferred government performance. An activity that management prefers
to be performed by a government position is considered a weaker
candidate for a feasibility study.
* Location. An activity that does not have to be performed locally is
considered a stronger candidate for a feasibility study.
* Fragmentation. An activity that is the minor responsibility of a
large number of positions, while difficult to compete, may benefit from
restructuring and is considered a stronger candidate for a feasibility
study.
* Centrality of performance. An activity that is typically performed at
a central location is considered a stronger candidate for a feasibility
study.
* Potential for process improvement. An activity with a greater
potential for improvement through modernization, reorganization, or
some other means is considered a stronger candidate for a feasibility
study.
* Impact on incident support. An activity that supports emergency
situations, such as firefighting, is considered a weaker candidate for
a feasibility study.
However, after reviewing the Forest Service's proposed Green Plan, USDA
directed the Forest Service to revise its plan to include all 24,512
commercial FTEs eligible for competition in either a feasibility study
or an A-76 competition. In response, the Forest Service issued a
revised Green Plan in December 2005, which OMB subsequently approved.
The revised plan included a single "catch-all" feasibility study--
labeled "All Other Commercial B Activities"--which had 15,000 FTEs
associated with it,[Footnote 17] nearly all of the commercial FTEs not
already identified in the draft Green Plan. According to a Forest
Service official, the additional feasibility study was added to comply
with the USDA directive to include all commercial FTEs in the Green
Plan, not because it included activities that might benefit from an A-
76 competition. OCFO officials explained to us that USDA agencies have
an option to perform feasibility studies to identify good candidates
for more targeted feasibility studies, and that this was the purpose of
the 15,000 FTE feasibility study. As of September 30, 2007, the Forest
Service had not started this study.
As table 2 shows, the Forest Service had completed only five of the
nine feasibility studies scheduled to be completed by September 30,
2007. The completed studies account for only 2,580 FTEs of the
approximately 19,000 FTEs that were scheduled to be studied by this
date.
Table 2: Forest Service's Schedule for Conducting Feasibility Studies
and the Studies' Status as of September 30, 2007:
Activities subject to feasibility study: Communication;
FTEs: 750;
Proposed beginning date: April 2005;
Proposed completion date: June 2005;
Feasibility study begun: Yes;
Feasibility study completed: Yes[A].
Activities subject to feasibility study: Aviation & Other Airborne
Activities;
FTEs: 500;
Proposed beginning date: October 2005;
Proposed completion date: March 2006;
Feasibility study begun: Yes;
Feasibility study completed: Yes.
Activities subject to feasibility study: Fleet Management;
FTEs: 135;
Proposed beginning date: October 2005;
Proposed completion date: March 2006;
Feasibility study begun: Yes;
Feasibility study completed: Yes.
Activities subject to feasibility study: Geospatial Services & Tech
Center;
FTEs: 95;
Proposed beginning date: October 2005;
Proposed completion date: March 2006;
Feasibility study begun: Yes;
Feasibility study completed: Yes.
Activities subject to feasibility study: Computer Application
Development;
FTEs: 750;
Proposed beginning date: September 2006;
Proposed completion date: March 2007;
Feasibility study begun: No;
Feasibility study completed: No.
Activities subject to feasibility study: NEPA Information Collection &
Analysis;
FTEs: 1,100;
Proposed beginning date: September 2006;
Proposed completion date: May 2007;
Feasibility study begun: Yes;
Feasibility study completed: Yes.
Activities subject to feasibility study: Dispatch/Coordination System;
FTEs: 300;
Proposed beginning date: September 2006;
Proposed completion date: March 2007;
Feasibility study begun: Yes;
Feasibility study completed: No.
Activities subject to feasibility study: All Other Commercial B
Activities;
FTEs: 15,000;
Proposed beginning date: October 2006;
Proposed completion date: February 2007;
Feasibility study begun: No;
Feasibility study completed: No.
Activities subject to feasibility study: Fire & Aviation Training;
FTEs: 300;
Proposed beginning date: March 2007;
Proposed completion date: September 2007;
Feasibility study begun: Yes;
Feasibility study completed: No.
Activities subject to feasibility study: Fuels Management Program;
FTEs: 500;
Proposed beginning date: September 2007;
Proposed completion date: March 2008;
Feasibility study begun: No;
Feasibility study completed: [Empty].
Activities subject to feasibility study: Technology or Service Centers;
FTEs: 200;
Proposed beginning date: April 2008;
Proposed completion date: September 2008;
Feasibility study begun: [Empty];
Feasibility study completed: [Empty].
Activities subject to feasibility study: Safety & Occupational Health;
FTEs: 150;
Proposed beginning date: September 2008;
Proposed completion date: March 2009;
Feasibility study begun: [Empty];
Feasibility study completed: [Empty].
Activities subject to feasibility study: Engineering Design &
Development;
FTEs: 900;
Proposed beginning date: September 2008;
Proposed completion date: May 2009;
Feasibility study begun: [Empty];
Feasibility study completed: [Empty].
Activities subject to feasibility study: Fire Preparedness Program;
FTEs: 500;
Proposed beginning date: November 2008;
Proposed completion date: May 2009;
Feasibility study begun: [Empty];
Feasibility study completed: [Empty].
Activities subject to feasibility study: Total;
FTEs: 21,180[B].
Source: Forest Service.
[A] The Forest Service used a private consultant to perform the
communication feasibility study. The study was completed but not
accepted by the Forest Service because it did not meet OCFO
requirements.
[B] While the revised Green Plan states that the agency plans to
conduct feasibility studies on activities associated with 24,512 FTEs,
the plan actually scheduled only studies for activities associated with
21,180 FTEs, with an additional 130 FTEs scheduled for an A-76
competition concerning communication activities. The remaining 3,202
FTEs are unaccounted for.
[End of table]
In our previous work,[Footnote 18] we found that effective strategic
plans take into account the resources required to implement the plan,
such as human capital, technology, and information. While Forest
Service officials could not provide us with any documents showing
resources involved in conducting feasibility studies, the effort does
not appear to be insignificant. According to OCFO guidance, 13 separate
steps are involved in conducting feasibility studies, with many of the
procedures involving several additional subtasks. Table 3 shows OCFO's
guidance for conducting feasibility studies.
Table 3: USDA OCFO Guidance for Conducting Competitive Sourcing
Feasibility Studies:
Procedure: Business needs assessment;
Description of activities involved:
* Evaluate core public need for activity;
* Identify key factors that affect performance of activity;
* Align activity with agency's strategic goals and objectives.
Procedure: Assumptions and constraints;
Description of activities involved:
* List all assumptions regarding the work performed for the activity;
- For example, scope, timelines, workload requirements, necessary
technology, customers, partners, stakeholders, funding, security, and
outside support;
* List all constraints regarding the work performed for the activity;
- For example, time, budget, organizational, structure, and physical
factors.
Procedure: Market research;
Description of activities involved:
* Analyze capabilities of commercial marketplace;
* Determine if alternative sources can satisfy the requirements of the
activity;
* Create inventory of all commercial firms that produce, distribute,
and support products and/or services similar to activity;
* Ensure that all market research complies with Federal Acquisition
Regulation Part 10 requirements.
Procedure: Current "as-is" assessment;
Description of activities involved:
* Describe "as-is" scope of current operations;
- Discuss current workload, customers, partners, and stakeholders;
- Describe pros and cons of current operations;
- Describe workflow, required human capital resources;
- Provide overview of how internal functions work with one another;
- Describe potential effects on other USDA and non-USDA organizations
should the activity be outsourced.
Procedure: Future "to-be" assessment;
Description of activities involved:
* Present a "to-be" scope of operations;
* Analyze expected workload, potential growth, future customers, and
stakeholders;
* Develop "most-efficient organization" model to accomplish the
activity.
Procedure: Performance gap analysis;
Description of activities involved:
* Define the gaps between the "as-is" and "to-be" scopes of operation;
* Prioritize performance gaps from most-to least-critical.
Procedure: Cost/Benefit analysis;
Description of activities involved:
* Compare cost and benefits of all options for performing the activity
to determine the most cost-effective solution;
- Calculate cost estimate; For example, labor, employee benefits,
materials, facilities, contractor expenses, and miscellaneous costs;
- Calculate benefits estimate; Estimate the overall public-value added
(in dollars) of performing the activity;
- Perform savings analysis; Compare "bottom line" of each performance
option.
Procedure: Civil rights impact assessment;
Description of activities involved:
* Identify and categorize the civil-rights impact of implementing
competitive sourcing in accordance with USDA Office of Civil Rights
policy guidance;
* Identify any potential risk of violation.
Procedure: Systems;
Description of activities involved:
* Provide an overview of all capital infrastructure systems and their
relationships;
- Current systems used to support activity; System-to-system
interfaces; Planned or in-progress system upgrades;
* Identify how the alternative options conform to the agency's IT
architecture standards and guidelines.
Procedure: Acquisition strategy;
Description of activities involved:
* Develop resource acquisition plan for competitive sourcing option;
* Identify expected performance levels;
* Develop oversight mechanism to ensure that minimum performance
standards are met.
Procedure: Project life-cycle schedule;
Description of activities involved:
* Identify major activities, milestones, and transition timelines from
"as-is" to "to-be" system, including all necessary tasks and subtasks
related to the activity.
Procedure: Requirements; Description of activities involved: * List the
items needed to complete the activity.
Procedure: Recommendations; Description of activities involved:
* Recommend future course of action based on feasibility study results;
* If competitive sourcing is recommended, identify timelines set forth
in the circular.
Source: USDA OCFO, Guidance for Determining the Feasibility of
Conducting Competitive Sourcing Competitions, Bulletin 2004-001 (May
11, 2004).
[End of table]
According to a senior Forest Service official, while the agency
considered personnel requirements when selecting the original 13
activities for feasibility studies, it did not do so when it expanded
the Green Plan to include all commercial FTEs. According to this
official, there would be no practical way to conduct the 15,000-FTE
study because it would include so many dissimilar activities.
Consequently, FTEs would first need to be grouped into many separate
activities, each requiring its own feasibility study, and as the number
of studies increased, so too would the demands placed on Forest Service
personnel. Several senior Forest Service officials with whom we spoke
said that it is inconceivable that the schedule of feasibility studies
in the OMB-approved Green Plan for fiscal years 2005 through 2009 could
be met.
Just as it did not take into account personnel resources in its OMB-
approved December 2005 Green Plan, the Forest Service also did not
consider congressionally directed funding limitations. While the Forest
Service's July draft Green Plan acknowledged the fiscal year 2005 $2
million statutory spending limitation on the Forest Service's
competitive sourcing activities, the December Green Plan did not. In
directing the Forest Service to include all commercial activities in
the plan, USDA said to do so as if there were no funding limitations.
Because Congress had placed limitations on the Forest Service's
spending for competitive sourcing activities in the previous 2 fiscal
years--2004 and 2005--factoring in the possibility of limited funds
available in future years would have been appropriate.
The Forest Service Lacks Guidance to Ensure That Key Work Activities
Are Excluded from A-76 Competitions:
Since an agency's FAIR Act inventory designates all of an agency's FTEs
as inherently governmental, commercial, or commercial but exempt from
competition (e.g., core-commercial), the development of an accurate
inventory becomes the foundation for determining which activities
agencies select for competition. As we have previously
reported,[Footnote 19] other agencies have had difficultly in
classifying positions when preparing their FAIR Act inventories, and
the Forest Service is no exception. The Forest Service's difficulty is
exemplified by significant fluctuations in the percentages of
inherently governmental activities in its inventory data for fiscal
years 2004 through 2006. In addition, there are differences between the
Forest Service's initial classifications and those reported in the
agency's OMB-approved Fair Act inventory. See table 4.
Table 4: Percentages of Inherently Governmental and Core-Commercial
Activities Identified by the Forest Service Compared with the
Percentages Reported in the OMB-Approved FAIR Act Inventories, Fiscal
Years 2004-2006:
Fiscal year: 2004;
Inherently governmental activities: Percentage identified by the Forest
Service: 21%;
Inherently governmental activities: Percentage reported in the Forest
Service's OMB-approved FAIR Act inventory: 21%;
Core-commercial activities: Percentage Identified by the Forest
Service: 14%;
Core-commercial activities: Percentage reported in the Forest Service's
OMB-approved FAIR Act inventory: 0%.
Fiscal year: 2005;
Inherently governmental activities: Percentage identified by the Forest
Service: 54;
Inherently governmental activities: Percentage reported in the Forest
Service's OMB-approved FAIR Act inventory: 21;
Core-commercial activities: Percentage Identified by the Forest
Service: 13;
Core-commercial activities: Percentage reported in the Forest Service's
OMB-approved FAIR Act inventory: 0.
Fiscal year: 2006;
Inherently governmental activities: Percentage identified by the Forest
Service: 7;
Inherently governmental activities: Percentage reported in the Forest
Service's OMB-approved FAIR Act inventory: 7;
Core-commercial activities: Percentage Identified by the Forest
Service: 13;
Core-commercial activities: Percentage reported in the Forest Service's
OMB-approved FAIR Act inventory: 13.
Source: Forest Service.
[End of table]
According to a Forest Service official involved in preparing the
agency's FAIR Act inventory, the fluctuations in the percentages of
FTEs designated as inherently governmental--ranging from a high of over
50 percent to a low of 7 percent--were the result of changes from year
to year in both the Forest Service's criteria for classifying
activities, and the methodology it used to calculate the percentages of
FTEs performing inherently governmental activities. In addition, the
differences in the percentages of FTEs designated as core-commercial
activities stemmed from disagreements between the Forest Service and
OMB about what constituted a core-commercial activity. Specifically, in
fiscal years 2004 and 2005, OMB did not approve the Forest Service's
written justifications for core-commercial activities. Instead, it
directed the Forest Service to reclassify all of the activities the
agency had identified as core-commercial activities to commercial, thus
making these activities eligible for competition.
The Forest Service's lack of consistency in its classification
methodology, coupled with disagreement between the Forest Service and
OMB regarding activity classifications, call into question the accuracy
and usefulness of the Forest Service's FAIR Act inventory data for
identifying inherently governmental and core-commercial activities when
planning specific A-76 competitions. Forest Service officials told us
that the FAIR Act inventory represents only a "rough snapshot" of the
inherently governmental and core-commercial activities within the
Forest Service, and that much additional work must be done to identify
specific activities suitable for competition. They raised the following
concerns about using FAIR Act inventory data to identify inherently
governmental and core-commercial activities:
* Improper classification of activities in the FAIR Act inventory.
Disagreements between the Forest Service and USDA regarding activity
designations raise questions about appropriate classification.
Furthermore, agency employees may be tempted to classify an activity as
either inherently governmental or core-commercial to exempt it from
competition.
* Mandatory use of OMB function codes. The Forest Service is required
by OMB to use OMB-assigned function codes for the FAIR Act inventory.
Although the guidance allows the Forest Service flexibility in defining
the codes, the officials told us that some of the codes were too broad
to be of any use or did not capture the actual work activities Forest
Service employees carried out.[Footnote 20]
Because Forest Service officials did not find the agency's FAIR Act
inventory data useful during the A-76 precompetition planning stage,
those officials responsible for the three completed competitions--IT
infrastructure, road maintenance, and fleet maintenance--said that they
developed their own methodologies to classify inherently governmental
and core-commercial activities. For each competition, agency officials
collected additional work activity information from field offices and
performed additional analysis beyond that conducted for the FAIR Act
inventory. In doing so, officials said, they received little guidance
on how to supplement the FAIR Act inventory data or how to identify
inherently governmental and core-commercial activities during the
precompetition stage of the completed competitions.
Despite the lack of guidance, Forest Service officials involved in the
three completed competitions said that they succeeded in identifying
and exempting from competition inherently governmental and core-
commercial activities by relying on intuitive knowledge and outside
consultants. Officials were confident of their success because of their
expertise in the activity being competed; the clearly commercial nature
of the activities; and the small size of the competitions, especially
the fleet maintenance and the road maintenance competitions. However,
the three completed competitions may not be representative of future
competitions.
Since these competitions, USDA and the Forest Service have taken steps
to better define inherently governmental and core-commercial activities
for the purposes of completing the FAIR Act inventory.[Footnote 21]
However, while we believe that the FAIR Act inventory data could be a
useful tool for planning competitive sourcing activities at an
agencywide level--for example, they can form the basis of the Green
Plan--we believe that additional guidance will be needed on how to
classify work activities during the precompetition planning stage of an
A-76 competition to ensure that key work activities are excluded from
the specific competition being planned. Without such guidance, the
Forest Service is at risk of subjecting inherently governmental and
core-commercial activities to A-76 competitions. This is particularly
true as the Forest Service continues to implement its Green Plan, which
could potentially subject up to two thirds of its FTEs to A-76
competitions.
The Forest Service Lacks a Strategy to Assess the Cumulative Effect
That A-76 Competitions Could Have on Its Ability to Respond to Wildland
Fires and Other Emergencies:
For the three competitions the Forest Service completed--IT
infrastructure, road maintenance, and fleet maintenance--officials
responsible for planning the competitions told us they likely had a
negligible effect on the Forest Service militia's ability to fight
fires and respond to emergencies for the following reasons:
* The three competitions affected a relatively small number of Forest
Service employees--1,323--compared with the approximately 80,000
federal employees who are ICS-certified.
* Contract provisions required the winning organization to provide
emergency incident support for activities within the scope of the
contract. For example, the MEO that won the road maintenance
competition was obligated to provide road maintenance, if needed, to
support the response to a wildfire incident.
* The largest of the three competitions--the IT infrastructure, which
affected 1,200 FTEs--was won by the MEO. Because the MEO is still a
unit of the Forest Service and staffed by Forest Service employees, the
agency was able to direct the MEO to allow ICS-certified employees to
volunteer to fight wildfires and respond to other emergencies by
performing non-IT-related duties.
While the Forest Service has thus far minimized the impact of A-76
competitions on the availability of ICS-certified personnel to fight
wildfires and respond to other emergencies, the following other factors
may affect the availability of ICS-certified personnel in the future:
* The Forest Service cannot realistically expect a private sector firm
to provide emergency services unrelated to the activity being competed.
For example, the Forest Service could not hold a competition for fleet
maintenance and expect firms that specialize in fleet maintenance to
provide unrelated services at the scene of the fire, such as providing
food and supplies.
* Whether an MEO or a private sector firm wins a competition, the
availability of ICS-certified personnel could decline. As with any
reorganization, competitive sourcing may cause some personnel to leave
the Forest Service. These employees could retire or be hired by other
federal agencies that participate in the NWCG, and thus they could
continue to fight fires and respond to other emergencies.[Footnote 22]
Other employees, however, may no longer be available if their new
employment situation does not allow them to take extended leaves of
absence to fight fires and respond to other emergencies.
In its fiscal years 2006 and 2007 appropriations for the Forest
Service, Congress required the agency, in carrying out any competitive
sourcing competition involving Forest Service employees, to take into
account the potential effect that contracting with a private sector
organization would have on the agency's ability to fight and manage
wildfires.[Footnote 23] For the only A-76 competition started since the
law was passed--the communications competition--the 130 employees
potentially affected by the competition were asked to report the amount
of time they spent responding to emergencies during the previous year.
However, the Forest Service did not collect information on what
specific duties those employees performed during the emergency
response, nor the ICS-qualifications they hold. Without this
information, the Forest Service cannot assess the full impact of this
competition on its emergency response capability.
While it is important to know the impact of individual competitions, it
is even more important to know the cumulative impact of multiple
competitions. However, the Forest Service does not have a strategy to
assess the cumulative impact that future competitions could have on its
firefighting capability. The absence of such a strategy could prove
significant if the Forest Service implements its plan to consider over
24,000 FTEs--or nearly two thirds of its workforce--for A-76
competition.
The Forest Service Does Not Have Sufficient Competitive Sourcing Cost
Data to Demonstrate Compliance with Its Statutory Spending Limitations
or to Accurately Report Savings to Congress:
The Forest Service does not know how much it spent on competitive
sourcing activities and, therefore, cannot be assured that it stayed
within the spending limitations or that it accurately reported savings
to Congress. For fiscal years 2004 through 2006, we found that the
Forest Service (1) narrowly interpreted the spending limitations to
exclude certain costs and (2) lacked sufficiently complete and reliable
cost data to demonstrate its compliance with the appropriations acts'
spending limitations on its competitive sourcing activities.
Furthermore, Congress may not have an accurate measure of the savings
from the Forest Service's A-76 competitions because the agency (1) does
not have complete and reliable cost data and (2) did not include all
costs associated with its competitive sourcing program.
The Forest Service's Interpretation of Costs That Are Subject to
Statutory Spending Limitations Was Too Narrow:
For fiscal years 2004 through 2006, the Forest Service did not attempt
to collect cost data on all competitive sourcing activities because it
believed that some costs associated with these activities were not
subject to the spending limitations of $5 million, $2 million, and $3
million, respectively, as established in its appropriations acts.
Specifically, the Forest Service reasoned that it did not have to
collect all the cost data because it interpreted the spending
limitations as being intended to restrict the number of A-76
competitions it conducted. It, therefore, asserted that the costs
associated with the competition stage were subject to the spending
limitations, while costs associated with the FAIR Act inventory;
precompetition planning; and postcompetition accountability activities
should not be included.
However, we found that the Forest Service's interpretation of which
competitive sourcing activities are subject to the spending limitations
was too narrow. Specifically, we concluded that, with only a limited
exception, the spending limitations apply to all costs attributable to
the Forest Service's competitive sourcing program, including
feasibility studies and other precompetition planning activities, the
competition itself, postcompetition accountability activities, and the
CSPO's costs to manage the program. Only the costs incurred to comply
with the FAIR Act, such as those to develop the inventories of
activities, are exempt from the limitations because the Forest Service
is statutorily required to perform FAIR Act-related activities even if
it makes no effort to conduct competitive sourcing.[Footnote 24] (See
app. II for further discussion on our legal interpretation.)
In April 2007, we sought the opinion of the USDA's General Counsel on
whether certain Forest Service competitive sourcing activities are
subject to the annual statutory spending limitations. Our
interpretation of the costs that were subject to the spending
limitations for fiscal years 2004 through 2006 is consistent with the
interpretation that USDA's General Counsel provided to us. The USDA's
General Counsel further stated that it believed that the Forest Service
may not have complied with the spending limitations in fiscal years
2004 through 2006.
The Forest Service Did Not Ensure That Cost Data Used to Comply with
Statutory Spending Limitations Are Reliable:
Even when it used its own interpretation of costs subject to the
spending limitations, the Forest Service still did not know whether it
complied with the limitations because it did not have a cost accounting
system sufficient to track costs related to competitive sourcing.
First, the Forest Service failed to establish tracking codes, known as
job codes, in its financial management system to enable it to
distinguish cost data on the activities that it believed were subject
to the spending limitations from other cost data.[Footnote 25] Forest
Service officials could not explain why the agency had not established
these job codes.
Second, the Forest Service lacked guidance and management oversight to
ensure that employees were accurately and consistently using the job
codes that were established for competitive sourcing activities. In
particular, Forest Service officials could not provide us with any
guidance that employees could use to determine when to charge time to
these job codes and when to charge time to codes associated with their
regular duties. Officials acknowledged that without this guidance,
employees probably continued to charge time spent on competitive
sourcing activities to their regular job codes. For example:
* In fiscal year 2004, Forest Service employees charged only 0.07 FTEs
to the job code established to track costs with the IT infrastructure
competition, even though competitive sourcing activities for the
competition took place throughout the entire fiscal year.
* In fiscal years 2005 through 2006, Forest Service employees charged
only 0.22 FTEs to the job code established to track costs associated
with the communications competition, even though competitive sourcing
activities for the competition began in fiscal year 2005 and were
ongoing at the end of fiscal year 2006.
In consultation with Forest Service officials, we agreed that it was
not feasible to reconstruct cost data for competitive sourcing
activities between fiscal years 2004 and 2006 to determine if the
Forest Service exceeded the appropriations acts' spending limitations.
Forest Service officials told us it would require a significant amount
of time and resources to query employees on their past work activities
associated with competitive sourcing. Furthermore, it is unlikely that
employees could reliably report the time they spent on competitive
sourcing activities that took place months and years ago. Finally,
officials told us that many employees involved with the competitions
have since left the agency.
Recognizing these shortcomings, the Forest Service has made some
efforts to improve its policies and guidance on how to establish job
codes and how employees are to use them to track competitive sourcing
costs. In fiscal year 2007, the Forest Service issued general policy on
when to charge time to competitive sourcing job codes. Among other
things, it issued a directive specifying that the cost of performing
some precompetition planning activities be charged to competitive
sourcing job codes. However, the Forest Service has yet to provide
details on how it intends to implement this policy, and thus we were
not able to evaluate it.
The Forest Service Could Not Substantiate Savings Reported to Congress:
The Consolidated Appropriations Act, 2004, establishes a governmentwide
requirement for each executive agency to report to Congress on the
actual savings derived from the implementation of competitions for the
prior fiscal year.[Footnote 26] In addition, OMB provides guidance on
preparing the report, including how to calculate savings.[Footnote 27]
According to the guidance, savings from completed competitions is
defined as the difference between the cost to the federal government of
performing the activity prior to the competition--the baseline cost--
and the cost to the government of performing the activity or paying for
it after the winner of the competition has begun performing the
activity. This is the postcompetition cost. Figure 1 shows how savings
from competitions are calculated.
Figure 1: OMB Calculation for Determining Savings from Competitions,
Fiscal Years 2004-2006:
[See PDF for image]
This figure is an illustration of the OMB Calculation for Determining
Savings from Competitions, Fiscal Years 2004-2006. The following data
is depicted:
Baseline cost minus Postcompetition cost equals Actual cost (Savings).
Baseline cost at a minimum shall include:
* In-house personnel costs (including benefits);
* Contract costs;
* Overhead costs (12 percent of in-house personnel costs).
Postcompetition cost shall include:
* Private Sector Contractor;
- Contract payments;
- Contract administration costs;
* MEO;
- Costs of in-house performance.
Source: GAO representation of OMB guidance.
[End of figure]
While OMB guidance specifies the postcompetition cost to the government
if a private sector contractor wins the competition, it does not
provide specific direction on how to calculate the postcompetition cost
to the government if the MEO wins the competition. Instead, the
guidance suggests determining the cost of in-house performance using a
methodology similar to that used to calculate the baseline costs.
In its reports to Congress on the actual savings derived from the
implementation of competitions, USDA reported that the Forest Service
saved over $38 million between fiscal years 2004 through 2006 as a
result of the three completed competitions--IT infrastructure
(approximately $35.2 million), fleet maintenance (approximately
$716,000), and road maintenance (approximately $2.2 million).
For these three competitions, Forest Service officials at the agency's
headquarters and in the regions could not provide us with the
information necessary to fully substantiate the savings reported to
Congress. Headquarters officials directed us to the regions responsible
for the competitions, where officials were able to provide some cost
data, but overall could not provide us with the information necessary
to substantiate the savings reported to Congress. GAO's document
entitled The Standards for Internal Control in the Federal Government
requires that all transactions and other significant events, such as
the Forest Service competitive sourcing costs and savings analyses, be
clearly documented, and the documentation should be readily available
for examination.[Footnote 28] Specifically, we found the following:
* IT infrastructure. Officials could not tell us the methodology they
used to determine postcompetition costs and did not have available the
data they used to calculate savings. They reconstructed the personnel
and overhead costs for operating the MEO, but could not reconstruct the
cost of outside contractors that the MEO employed because these costs
were not discernable from other cost data that the Forest Service
collected. Ultimately, these officials could only speculate about what
the contract costs might have been and how savings were calculated.
* Fleet maintenance. As with the IT infrastructure competition,
officials could not tell us the methodology they used to determine
postcompetition costs and did not have available all of the data they
used to calculate savings. Although officials provided us with the bulk
of the postcompetition cost data--the payments made to Serco, the
private sector organization that won the competition--they could not
provide us with all of the costs.
* Road maintenance. Unlike the other two competitions, officials
responsible for this competition described the methodology. However,
they were unable to provide us with baseline cost data for fiscal year
2004, and, as a result, we could not verify the reported savings for
that year.
In April 2007, OMB issued guidance to help agencies substantiate the
savings they have achieved through A-76 competitions. The guidance
describes agency responsibilities related to tracking and reviewing
cost data to ensure savings are being realized. It also requires all
agencies to develop plans to independently validate a sampling of
competitions to confirm projected savings. Among other things, the
guidance requires agencies to assess the completeness and accuracy of
cost data. Forest Service officials told us that the agency is working
to implement OMB's guidance. USDA told us that it is directing the
Forest Service to validate the savings from the IT infrastructure
competition by the fourth quarter of fiscal year 2008.
The Forest Service Did Not Include All Costs Associated with Its
Competitive Sourcing Program When Calculating Savings Reported to
Congress:
While the Forest Service could not substantiate the savings it reported
to Congress using OMB's guidance, the guidance itself allows agencies
to exclude some costs associated with A-76 competitions, which, if
excluded, may not provide Congress with an accurate measure of the
savings produced by the competitions. Although Forest Service officials
could not tell us all of the costs that were included or excluded in
their savings estimates, they stated with confidence that some costs
were excluded. Specifically, they said that transition costs associated
with transferring responsibilities to the winning organization were not
included in the savings calculations for the three competitions we
reviewed. Transition costs include costs associated with decreasing the
size of the workforce through buyouts and retirements, and costs to
transfer employees who are being retained to other locations. These are
not necessarily one-time costs because an agency is required to
complete a follow-on competition for an activity, generally after about
3 to 5 years. In the three competitions we reviewed, we found the
following transition costs were excluded:
* IT infrastructure. Forest Service officials told us that they
excluded approximately $40 million in transition costs from the savings
calculations that were reported to Congress.[Footnote 29] These costs
exceeded by about $5 million the $35.2 million that the Forest Service
reported to have saved during fiscal years 2005 and 2006 as a result of
the competition.
* Fleet maintenance. Forest Service officials told us they excluded
about $670,000 in transition costs from the savings calculations that
were reported to Congress, nearly equaling the approximately $716,000
that the Forest Service reported to have saved since fiscal year 2005
as a result of the competition.
* Road maintenance. Forest Service officials told us they excluded
about $320,000 in transition costs from the savings calculations that
were reported to Congress. These costs are approximately 15 percent of
the total $2.2 million in reported savings since fiscal year 2004.
In addition to transition costs, there are also precompetition planning
costs (including, as of May 2004, feasibility study costs). Like
transition costs, OMB guidance does not direct that precompetition
planning costs be included in the savings calculations. A Forest
Service official told us that precompetition planning costs were
excluded from the savings calculations for the three completed
competitions. Forest Service officials could not provide us with
estimates of these costs because they were not tracked.
OMB guidance also does not direct agencies to include in their savings
calculation other potential costs associated with the termination of a
contract. To illustrate, 14 months after the private sector contractor,
Serco, began performing fleet maintenance activities, the Forest
Service terminated the contract. Under the terms of the contract, the
Forest Service must negotiate with Serco on any costs associated with
the termination itself. Forest Service officials stated that in March
2007, Serco proposed a settlement amount that it contends would
reimburse it for costs such as those associated with vacating sites as
well as administrative costs and attorneys' fees. Serco also contends
that the Forest Service owes it additional compensation unrelated to
the contract termination. Serco's claim stems from a disagreement with
the Forest Service over the terms of the contract. Finally, Forest
Service officials also told us that the agency has incurred additional
costs--exceeding its costs for fleet maintenance before the Serco
contract--because maintenance work is now being performed by retail
vendors. Officials told us that the Forest Service is precluded from
returning the work to the agency for in-house performance.[Footnote 30]
Because these issues are still pending, we did not include the dollar
amounts of Serco's claims or the additional costs incurred by the
Forest Service, and the Forest Service officials told us that they did
not want to comment further on this issue.
Conclusions:
The government's goal is to obtain high-quality services at a
reasonable cost, regardless of whether these services are performed by
the public or private sector. Competition between the public and
private sectors is an important tool in reaching this goal. The 2001
President's Management Agenda has reemphasized the importance of using
this tool as a means to deliver the best value to the American
taxpayer.
In keeping with the President's Management Agenda, the Forest Service
established a competitive sourcing program and began holding A-76
competitions. The agency now has plans to consider competing up to two
thirds of its workforce against the private sector. This is a massive
undertaking whose long-term success will depend on a realistic
strategic plan, clear guidance to identify the key work activities that
should be excluded from competition, and a strategy to assess the
cumulative effect that outsourcing a large number of federal jobs could
have on its firefighting capability. Unfortunately, the Forest Service
has none of these in place. Because the Forest Service has just begun
to implement its competitive sourcing program--having competed less
than 5 percent of its workforce against the private sector--these
problems have not yet had a significant impact on the Forest Service's
competitive sourcing program. However, as the Forest Service implements
its Green Plan and greatly expands the scope of its competitive
sourcing program, the problems we have identified could, in the long
term, severely impact its ability to implement this program
effectively--jeopardizing not just the overall success of the program,
but the nation's ability to fight fires and respond to other
emergencies.
More immediate is our concern that the Forest Service did not collect
complete and reliable cost data related to its competitive sourcing
program during fiscal years 2004 through 2006. As a result, the agency
did not know how much it had spent on competitive sourcing activities
and, consequently, whether it had complied with statutory spending
limitations. We are also concerned about the usefulness of the cost
savings that the Forest Service reported to Congress. The Forest
Service could not provide us with sufficient data to verify the
accuracy of the reported savings and excluded substantial costs from
the savings calculations. Although the agency followed OMB guidance in
calculating savings, we believe the guidance provides the Forest
Service with the latitude to include the other costs we identified--
some of which were substantial. Including these costs would have
provided Congress with a more realistic picture of the extent to which
the Forest Service's competitive sourcing program is saving the
American taxpayers' money.
Recommendations for Executive Action:
To improve the Forest Service's management of its competitive sourcing
program, we recommend that the Secretary of Agriculture direct the
Chief of the Forest Service to take the following five actions:
* Revise the Green Plan to establish an implementation schedule that
takes into account resource limitations.
* Develop clear guidance on when and how to identify inherently
governmental and core-commercial activities so they are excluded from
competitive sourcing competitions.
* Develop a strategy for assessing the cumulative effect of competitive
sourcing competitions on the Forest Service's firefighting and
emergency response capabilities.
* Collect complete and reliable cost data on competitive sourcing
activities to ensure that the Forest Service is able to comply with the
appropriations acts' spending limitations.
* Ensure that the savings reported to Congress are a realistic measure
of the actual savings resulting from A-76 competitions by (1) verifying
the accuracy of the data and (2) including costs such as planning costs
and transition costs when calculating the savings.
Agency Comments:
We provided a draft of this report to the U.S. Department of
Agriculture for review and comment. The Forest Service responded. It
generally agreed with our recommendations but had concerns about some
of the specific findings and conclusions in the report. We present the
agency's concerns and our responses to them in appendix III.
As agreed with your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution for 30 days
from the report date. At that time, we will send copies of this report
to interested congressional committees, the Secretary of Agriculture,
and the Chief of the Forest Service. We will also make copies available
to others upon request. In addition, the report will be available at no
charge on the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staffs have any questions about this report, please
contact me at (202) 512-3841 or nazzaror@gao. gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff who made major contributions
to this report are listed in appendix IV.
Signed by:
Robin M. Nazzaro:
Director, Natural Resources and Environment:
List of Requesters:
The Honorable Jeff Bingaman:
Chairman:
Committee on Energy and Natural Resources:
United States Senate:
The Honorable Dianne Feinstein:
Chairwoman:
Subcommittee on Interior, Environment, and Related Agencies:
Committee on Appropriations:
United States Senate:
The Honorable Byron L. Dorgan:
United States Senate:
The Honorable Russ Feingold:
United States Senate:
The Honorable Herb Kohl:
United States Senate:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
This report discusses the extent to which the U.S. Department of
Agriculture's (USDA) Forest Service has (1) plans and guidance to help
implement its competitive sourcing program effectively and (2)
sufficient cost data to ensure that it complied with its competitive
sourcing statutory spending limitations and accurately reported its
competitive sourcing savings to Congress for fiscal years 2004 through
2006.
To address these two objectives, we focused on Forest Service
competitive sourcing activities between fiscal years 2004 and 2006. For
the first objective, we compared the Forest Service's Green Plan,
including draft versions of the plan, with previous work that GAO has
performed that identified the elements of effective strategic plans. We
also reviewed the guidance that the Office of Management and Budget
(OMB) and USDA provided to the Forest Service on how to construct its
Green Plan. Furthermore, we examined how the Forest Service scoped the
three competitions that it completed during this time frame.
Specifically, we examined how the Forest Service ensured that it did
not include inherently governmental and core-commercial activities in
the competitions, and how it assessed the impact that competitions
could have on the nation's ability to fight wildland fires and respond
to other emergencies. Finally, we examined the guidance currently
available to Forest Service employees responsible for scoping
competitive sourcing competitions and interviewed Forest Service
officials familiar with the agency's competitive sourcing activities.
To respond to the second objective, we examined the appropriations acts
for fiscal years 2004 through 2006 to determine which costs incurred by
the Forest Service during those fiscal years were subject to the
spending limitations. Appendix II explains this analysis in greater
detail. We then asked the Forest Service to provide us with cost data
for activities associated with its competitive sourcing program,
including cost data we had determined were subject to the spending
limitations. We assessed the reliability of these data and found them
unreliable as a measure of the costs and savings associated with the
program. Specifically, our review of cost data from the USDA's Federal
Financial Information System (FFIS) and subsequent discussions with
Forest Service officials, including the Chief Financial Officer,
confirmed that the Forest Service had not issued formal guidance on
which costs where to be charged to competitive sourcing job codes in
FFIS, and that there was a lack of institutionalized policies and
procedures to guide employees in tracking the time and costs associated
with competitive sourcing activities. As a result, Forest Service
officials, including the Chief Financial Officer, agreed that it was
likely that employees used job codes inconsistently and that the
accounting of competitive sourcing expenditures between fiscal years
2004 and 2006 were unreliable and inaccurate. We also asked the Forest
Service for data to substantiate the annual savings resulting from
competitive sourcing competitions it reported to Congress in fiscal
years 2004 through 2006. For the three competitions completed during
this time frame, Forest Service officials either could not provide us
with the methodology used to calculate the savings, or could not
provide us with all of the data used to calculate the savings. As a
result, we were unable to replicate the Forest Service's savings
calculations, and thus we determined the reported numbers were
unreliable because data reporting strategies were absent or
inconsistent, there were no internal processes for verifying the
accuracy of the data, and there was no documentation with which we
could verify the accuracy of the data. Finally, in the course of our
work, we identified categories of costs that were not included in the
Forest Service's savings calculations. We include examples of these
costs in this report to show their magnitude relative to the savings
reported to Congress; however, we did not independently verify the
accuracy of these costs. We conducted our work between October 2006 and
January 2008 in accordance with generally accepted government auditing
standards.
[End of section]
Appendix II: Limitations on Use of Appropriations for "Competitive
Sourcing Studies and Related Activities"
The Forest Service relies on both federal employees and private
contractors to perform commercial activities--activities performed by
the government that are also regularly performed in the commercial
market place--such as data entry, photocopying, and other
administrative support services. To determine whether to convert the
performance of such activities from federal employees to private
contractors, or vice versa, the Forest Service follows the competitive
process set out in Office of Management and Budget (OMB) Circular No. A-
76, Performance of Commercial Activities (May 29, 2003), as revised,
which establishes executive branch policy for the competition of
commercial activities.[Footnote 31] The Forest Service is also subject
to the requirements of the Federal Activities Inventory Reform Act of
1998 (FAIR Act),[Footnote 32] which mandates agencies to develop
inventories of their activities, and the President's Management Agenda
(PMA), launched in 2001, which includes a governmentwide "competitive
sourcing" initiative to increase and to make more efficient and
effective agencies' use of the circular's competitive process.[Footnote
33] To implement these requirements, the Forest Service established a
competitive sourcing program that is administered by the Competitive
Sourcing Program Office.[Footnote 34]
A provision in each of the annual appropriations acts funding the
Forest Service for fiscal years 2004 through 2006 limited the amount of
appropriated funds available to the Forest Service for "competitive
sourcing studies and related activities" to between $2 million and $5
million (spending limitations). Five members of the U. S. Senate
requested that we determine which costs incurred by the Forest Service
in fiscal years 2004 through 2006 were subject to the spending
limitations. In our view, these spending limitations apply to all costs
under the Forest Service's competitive sourcing program, except for
costs incurred to carry out the FAIR Act.
Background:
OMB Circular No. A-76 includes, in appendix B, detailed guidance on the
competitive process a federal agency should follow to determine whether
an activity should be performed by a public or private source.[Footnote
35] The process is divided into three stages: (1) a precompetition
preliminary planning stage, consisting, at minimum, of nine specified
steps; (2) a competition stage that starts with a formal public
announcement of a standard or streamlined competition[Footnote 36]
between private and public sources and ends with announcing a
performance decision; and (3) a postcompetition accountability stage,
which mandates such actions as transferring performance of the
activities to the winning entity, maintaining a database to track the
execution of competitions, monitoring performance, and submitting
reports to OMB. To avoid the mistakes it made during earlier
competitions, the Forest Service has supplemented this process since
2004 by first conducting studies to determine the feasibility of
carrying out this competitive process (feasibility studies) for each
activity.[Footnote 37] In 1998, Congress enacted the FAIR Act, which
requires federal agencies to submit to OMB their annual inventories of
commercial activities and, after a period of review and consultation
with OMB, transmit the final inventories to Congress and make them
available to the public. Appendix A to OMB Circular No. A-76 (Inventory
Process) implements the FAIR Act.
In August 2001, the Administration launched the PMA as its reform
agenda for improving management and performance in the federal
government. The PMA includes a competitive sourcing initiative to
simplify and improve the process for choosing private or public
sources. To implement the PMA competitive sourcing initiative, the
Forest Service stated in its fiscal year 2004 budget justification that
it planned to conduct competitions for activities associated with a
total of 11,000 full-time employees or their equivalent (FTEs), and
that competitive sourcing costs were expected to rise.[Footnote 38]
Concerned about how the Forest Service had implemented the PMA
competitive sourcing initiative,[Footnote 39] the House and Senate
appropriations committees included language in the appropriations bills
for fiscal year 2004 that led to the enactment of the following
spending limitation: "Of the funds appropriated by this Act, not more
than $5,000,000 may be used in fiscal year 2004 for competitive
sourcing studies and related activities by the Forest
Service."[Footnote 40] The Forest Service's appropriations acts for
fiscal years 2005 and 2006 included spending limitations with identical
language, except that the maximum amount available for this purpose was
$2 million and $3 million, respectively.[Footnote 41] At issue here is
determining the range of Forest Service activities that are covered by
the appropriations acts' spending limitations on "competitive sourcing
studies and related activities."
Discussion:
Construing the meaning of a statutory provision starts with the
statutory language.[Footnote 42] The appropriations acts for fiscal
years 2004 through 2006 define a "competitive sourcing study" for
purposes of the spending limitations as:
"a study on subjecting work performed by Federal Government employees
or private contractors to public-private competition or on converting
the Federal Government employees or the work performed by such
employees to private contractor performance under the Office of
Management and Budget Circular A-76 or any other administrative
regulation, directive, or policy."[Footnote 43]
Unfortunately, by defining a "competitive sourcing study" as a "study,"
albeit in the context of private versus public source
performance,[Footnote 44] the appropriations acts do not clearly
indicate the breadth of Forest Service activities that fall within its
meaning.[Footnote 45] At the very minimum, however, the phrase includes
the competition stage (the second stage) of the OMB Circular No. A-76
process because it represents the formal structured process of
soliciting and evaluating proposals from public and private sources.
The Forest Service takes the position that the annual spending
limitations apply only to costs attributable to the competition
stage.[Footnote 46] We disagree, as does the U. S. Department of
Agriculture's General Counsel, who provides legal assistance to the
Forest Service.[Footnote 47] Even if we were to read the word "study"
as narrowly as the Forest Service apparently does, the additional words
"and related activities" in this context make clear that the statutory
language includes more than simply the competitions.
The statutes do not define "related activities" or set out specific
criteria for identifying them. While a broad range of activities are
"related," in the sense of having some logical connection to
competitive sourcing studies, we believe Congress intended to focus on
those activities that the Forest Service performs as part of its
implementation of the President's competitive sourcing
initiative.[Footnote 48] In other words, "related activities" are those
activities the Forest Service performs if it is considering whether to
conduct a public-private competition. Under the Forest Service's
competitive sourcing program, no competition is conducted until the
completion of a feasibility study, the objective of which is to
evaluate whether an activity should be subject to the A-76 competitive
sourcing process. Likewise, no competition is conducted under OMB
Circular No. A-76 until the completion of the precompetition stage (the
first stage), which also includes tasks such as conducting market
research and developing an acquisition plan. Feasibility studies and
precompetition planning activities are thus prerequisites to a
competition and, therefore, in our view, "related activities."
Similarly, the postcompetition stage is a required consequence of
conducting a competition. The Forest Service's Competitive Sourcing
Program Office supports and manages these and other activities in the
Forest Service's competitive sourcing program. Because these activities
further the Forest Service's objective of conducting competitions under
the competitive sourcing initiative, we view them as "related
activities" subject to the spending limitation.
While it can be argued that the words "and related activities" include
activities the Forest Service performs to carry out the FAIR Act, such
as preparing inventories and reporting to Congress, we think the better
view is that these costs are not encompassed in this limitation.
Congress by law expressly requires these activities, even absent any
other competitive sourcing program activities. Moreover, complying with
the FAIR Act does not further the Forest Service's progress on the PMA
competitive sourcing initiative, and it was the Forest Service's cost
to implement this initiative to which the congressional committees were
reacting.[Footnote 49] Our interpretation is consistent with the
interpretation provided to us by the USDA Office of General
Counsel.[Footnote 50]
Conclusion:
Accordingly, we conclude that the spending limitations on "competitive
sourcing studies and related activities" included in the appropriations
acts funding the Forest Service for fiscal years 2004 through 2006
apply to all costs attributable to the Forest Service's competitive
sourcing program, including the following:
* conducting feasibility studies to evaluate which activities should be
subject to the competitive sourcing process set out in OMB Circular No.
A-76;
* engaging in the competitive sourcing process set out in OMB Circular
No. A-76, including activities related to precompetition planning,
competitions between sources, and postcompetition accountability; and:
* managing the agency's competitive sourcing program.
The appropriations acts spending limitations, however, do not apply to
costs incurred for complying with the FAIR Act, which the Forest
Service must do even if it applies no efforts to competitive sourcing.
[End of section]
Appendix III: Comments from the Forest Service:
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
United States Department of Agriculture:
"Caring for the Land and Serving People"
Forest Service:
Washington Office:
1400 Independence Avenue, SW:
Washington, DC 20250:
File Code: 1310-1/1420:
Date: December 31, 2007:
Robin Nazzaro:
Director, Natural Resources and Environment:
Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Ms. Nazzaro:
Thank you for the opportunity to review and comment on the draft
Government Accountability Office report GAO-08-195, "Forest Service:
Better Planning, Guidance, and Data Needed to Improve Management of the
Competitive Sourcing Program".
Although we have some concerns about some of the specific findings and
conclusions in the report, the Forest Service generally agrees with the
GAO recommendations. See the enclosure to this letter for specific
Forest Service comments on the draft report.
The Forest Service appreciates this opportunity to comment on the draft
report. If you have any questions, please contact Ronald Ketter,
Director of Strategic Planning and Performance Accountability at 202-
401-4470.
Sincerely,
Signed by:
Abigail R. Kimbell:
Chief:
Enclosure:
cc: Ronald Ketter, Jacqueline Myers, Clarice Wesley, Robert Rinaldi:
Forest Service Comments On Gao-08-195:
Forest Service: Better Planning, Guidance, and Data Needed to Improve
Management of the Competitive Sourcing Program:
The Forest Service response to the draft report, provided below, is
grouped under general categories to which agency comments relate.
1) Forest Service Guidance and Strategy for Planning and Conducting
Competitive Sourcing Studies:
The GAO report states that the Forest Service lacks guidance to ensure
that key work activities are excluded from A-76 competitions, and it
lacks a strategy to assess the cumulative effect that A-76 competitions
could have on its ability to respond to wildland fires and other
emergencies. The report suggests that the agency may be at risk of
subjecting inherently governmental or core commercial activities to
competition. [See comment 1]
Although the Forest Service agrees with the GAO recommendations, it
does not concur with this finding. The Forest Service believes its
current process offers sufficient safeguards to avoid these risks. The
Forest Service FAIR Act Inventory, which forms the basis for
identifying commercial activities for future feasibility study,
excludes inherently governmental positions from study. The feasibility
study process further identifies whether a public-private competition
of certain functions or activities is feasible. The Chief of the Forest
Service must approve its recommendations before any competition can be
considered further. Finally, should the Forest Service proceed to a
public-private competition, a senior management team prepares a
performance work statement for a competition that describes the
specific work to be performed. The Forest Service believes that these
various steps offer sufficient safeguards to prevent inadvertently
subjecting inherently governmental or core commercial activities to
competition.
The agency acknowledges that it lacks an overall strategy to assess the
cumulative effect that A-76 competitions could have on its incident
response capability, but it does consider and address potential effects
on a study by study basis.
2) Forest Service Ability to Report Costs and Savings:
While the Forest Service recognizes its need to improve documentation
for competitive sourcing costs and savings, it is concerned with
several statements in the GAO report related to this topic. The Forest
Service is committed to following government-wide directions for
providing reliable data on competitive sourcing costs and savings to
Congress. The GAO report raises concerns that certain costs were not
included, but these concerns may be in conflict with current OMB
guidance on what costs should and should not be included in these
reports. The Forest Service believes that it complied with OMB guidance
on whether to include certain costs such as the costs of planning,
phase-in, or transition. We also are concerned over differing direction
related to whether incremental or full costs of studies should be
reported. [See comment 2]
Costs related to termination of the Serco contract are still being
negotiated. Due to the ongoing negotiations, the Forest Service
believes discussion of this topic in the report should not include
mention of additional costs incurred, amounts of contract claims, or
proposed settlement amounts. Upon completion of all negotiations,
consideration will be given to the appropriateness of including any of
these costs in savings calculations. [See comment 3]
3) Forest Service Compliance with Legislative Spending Limitations:
The GAO report states that the Forest Service interpreted the
legislative spending limitation too narrowly. While the Forest Service
interpreted feasibility studies as outside the spending limitation, the
total amount it budgeted for competitive sourcing and feasibility
studies during this period did not exceed the total spending
limitation. Therefore, it does not believe that it exceeded the
spending limitation, even under the broader interpretation. [See
comment 4]
Although cost data prior to fiscal year 2007 was less reliable, there
was so little competitive sourcing activity during 2004 to 2006 that
the agency firmly believes it did not violate the respective
appropriation caps for these fiscal years. A system of project specific
job codes was instituted in FY 2007 and full costs were tracked for all
studies, including feasibility studies.
This series of job codes has been further refined for the purposes of
more accurately obtaining those CS costs which should be applied
against the spending limitation which we believe should include support
for the post competition accountability review and independent
validation processes. Cost tracking excludes only the FAIR Act
Inventory workload.
[End of enclosure]
The following are GAO's comments on the Chief of the Forest Service
letter dated December 31, 2007.
GAO Comments:
1. We believe that the Forest Service's comments misstate our position
regarding its guidance for ensuring that key work activities are
excluded from A-76 competitions. Our report does not state that the
Forest Service has no guidance, but rather that it lacks clear
guidance. Without clear guidance, we do not believe that the Forest
Service's current process can offer sufficient safeguards to ensure
that key work activities are excluded from A-76 competitions,
especially in light of the agency's plan to examine the activities of
two thirds of its workforce. For example, regarding the FAIR Act
inventory, we found significant fluctuations in the percentages of
inherently governmental activities in the inventory data for fiscal
years 2004 through 2006, suggesting that the Forest Service had
difficulty classifying positions when preparing the inventory. In
addition, Forest Service officials told us that the inventory data
represents only a "rough snapshot" of the inherently governmental and
core-commercial activities within the Forest Service, and that much
additional work must be done to identify specifics activities suitable
for competitions. Finally, the Forest Service officials responsible for
the three completed competitions--IT infrastructure, road maintenance,
and fleet maintenance--told us that they developed their own
methodologies to classify inherently governmental and core-commercial
activities because they did not find the agency's FAIR Act inventory
data useful and received little guidance on how to identity inherently
governmental and core-commercial activities. Nevertheless, these
officials were confident that they successfully identified and exempted
from competition inherently governmental and core-commercial activities
because of, among other reasons, the clearly commercial nature of the
activities. However, the three completed competitions may not be
representative of future competitions, particularly if the Forest
Service proceeds with its plan to examine the work activity of two
thirds of its workforce.
2. As we state in our report, OMB guidance on how to calculate
competitive sourcing savings reported to Congress does not specify all
of the costs that should be included in the calculations, thus
providing the Forest Service with some discretion on which costs to
include. Although the Forest Service followed OMB guidance in
calculating savings, we believe the guidance provides the Forest
Service with the latitude to include the other costs we identified--
some of which substantially reduce or even exceed the savings reported
to Congress. Including these costs would have provided Congress with a
more realistic picture of the extent to which the Forest Service's
competitive sourcing program is saving the American taxpayers' money.
3. At the Forest Service's request, we excluded from our report much of
the information we received related to termination of the Serco
contract because negotiations between the Forest Service and Serco are
ongoing. However, excluding all mention of the types of possible
additional costs would provide the false impression that the savings
already reported to Congress resulting from the fleet maintenance
competition have been realized, when in fact they are being called into
question.
4. Although the Forest Service does not believe it exceeded the
spending limitations, even under the broader interpretation, we found
that it does not have the data to substantiate this claim.
Specifically, as we state in our report, the Forest Service did not
collect complete and reliable cost data related to its competitive
sourcing program during fiscal years 2004 through 2006 because it did
not have a cost accounting system sufficient to track costs related to
competitive sourcing. Furthermore, in consultation with Forest Service
officials, we agreed that it was not feasible to reconstruct cost data
for competitive sourcing activities for these years because doing so
would require a significant amount of resources and would not likely
provide reliable data. Because the Forest Service was unable to provide
us with complete and reliable cost data and it was not feasible to
reconstruct the data, neither the Forest Service nor GAO can determine
with an appropriate degree of certainty if the Forest Service exceeded
the appropriations acts' spending limitations.
In addition, we acknowledge in our report that the Forest Service has
made efforts to improve its policies and guidance on how to establish
job codes and how employees are to use them for tracking purposes,
including a directive specifying that the cost of performing some
precompetition planning activities be charged to competitive sourcing
job codes.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Robin Nazzaro, (202) 512-3841 or nazzaror@gao.gov:
Staff Acknowledgments:
In addition to the individual named above, Andrea Wamstad Brown,
Assistant Director; F. Abe Dymond; Charles T. Egan; Lauren S. Fassler;
Peter Grinnell; David Perkins; Aaron Jay Shiffrin; and Carol Herrnstadt
Shulman made key contributions to this report.
[End of section]
Footnotes:
[1] The Executive Office of the President and the Office of Management
and Budget, The President's Management Agenda (2001).
[2] OMB Circular No. A-76, Performance of Commercial Activities (May
29, 2003), and Pub. L. No. 105-270, 112 Stat. 2382 (Oct. 19, 1998).
[3] Pub. L. No. 108-199, Div. F, Title VI, § 647(b), 118 Stat. 3, 361
(Jan. 23, 2004).
[4] OMB memoranda, M-07-01 (Oct. 5, 2006); M-06-01 (Oct. 7, 2005); and
M-05-01 (Oct. 15, 2004).
[5] Department of the Interior and Related Agencies Appropriations Act,
2004, Pub. L. No. 108-108, § 340(d)(3), 117 Stat. 1241, 1316 (Nov. 10,
2003); Department of the Interior and Related Agencies Appropriations
Act, 2005, Pub. L. No. 108-447, div. E, § 332(a)(3), 118 Stat. 2809,
3100 (Dec. 8, 2004); Department of the Interior, Environment, and
Related Agencies Appropriations Act, 2006, Pub. L. No. 109-54, §
422(a)(2), 119 Stat. 499, 554 (Aug. 2, 2005); and Revised Continuing
Appropriations Resolution, 2007, Pub. L. No. 110-5, § 104, 121 Stat. 8,
9 (Feb. 15, 2007) (operates to retain the spending limitation imposed
on the Forest Service in the fiscal year 2006 appropriations act).
[6] USDA, Forest Service, Report to Surveys and Investigations Staff,
Committee on Appropriations, U.S. House of Representatives,
Implementation of the Competitive Sourcing Initiative at the U.S.
Forest Service (March 2004).
[7] The Geospatial Service and Technology Center is a Forest Service
facility primarily located in Salt Lake City, Utah, that provides
geographic data and mapping services to all departments within the
Forest Service.
[8] There was a fourth competition completed during this time frame
that considered 8 FTEs. We excluded this competition from our analysis
because it was conducted using the streamlined competition process,
which is faster and less complex than the standard competition process
that was used for the other three competitions.
[9] The NWCG draws on employees from the Forest Service and from the
Department of the Interior's Bureau of Land Management, Bureau of
Indian Affairs, Fish and Wildlife Service, and National Park Service.
[10] OMB Circular No. A-76, Performance of Commercial Activities (May
29, 2003).
[11] See The President's Management Agenda (2001). The five initiatives
are strategic management of human capital, improved financial
performance, expanded electronic government, budget and performance
integration, and competitive sourcing.
[12] The FAIR Act, Pub. L. No. 105-270, § 5, 112 Stat. 2382, 2384 (Oct.
19, 1998).
[13] OMB guidance for use of commercial exemption justifications states
the following: "As a general matter, a function should be considered
core to an agency's operation only if--and only to the extent that--
loss of in-house performance of the function would result in
substantial risk to the agency's ability to accomplish its unique
mission." See OMB, 2005 Inventories of Commercial and Inherently
Governmental Activities, M-05-12 (May 23, 2005).
[14] Besides core-commercial, there are four other subcategories of
commercial activities that are exempt from competition. Commercial
activities are exempt if they are (1) subjects of an in-progress A-76
competition, (2) performed by government personnel as the result of an
A-76 competition within the past 5 years, (3) involved in agency
restructuring, or (4) performed by government personnel due to a
statutory prohibition against private sector performance.
[15] The name Green Plan is derived from the July 2003 OMB standards
for evaluating federal agencies' progress in implementing PMA
initiatives. These standards describe the degree of each agency's
progress as red, yellow, or green, where green is considered fully
successful. One OMB standard requires federal agencies to develop a
competition plan as a requirement to earn green status for the
competitive sourcing initiative.
[16] See footnote 5.
[17] Commercial B activities are commercial activities suitable for
competition--they exclude inherently governmental and core-commercial
activities.
[18] GAO, Congressional Review of Agency Strategic Plans, GAO/ GGD-
10.1.16 (Washington, D.C.: May 1997); Transforming the Civil Service:
Building the Workforce Of the Future, Results Of a GAO-Sponsored
Symposium, GAO/GGD-96-35 (Washington, D.C.: Dec. 20, 1995); Managing
for Results: Experiences Abroad Suggest Insights for Federal Management
Reform, GAO/GGD-95-120 (Washington, D.C.: May 2, 1995); Managing for
Results: State Experiences Provide Insights for Federal Management
Reforms, GAO/GGD-95-22 (Washington, D.C.: Dec. 21, 1994); Government
Reform: Goal-Setting and Performance, GAO/AIMD/ GGD-95-130R
(Washington, D.C.: Mar. 27, 1995); and Executive Guide: Improving
Mission Performance Through Strategic Information Management and
Technology, GAO/AIMD-94-115 (Washington, D.C.: May 1994).
[19] GAO, Competitive Sourcing: Greater Emphasis Needed on Increasing
Efficiency and Improving Performance, GAO-04-367 (Washington, D.C.:
Feb. 27, 2004).
[20] As we have previously reported, the inapplicability of the OMB-
assigned codes has been a problem for many other federal agencies. Our
prior work on this issue includes GAO-04-367 and Competitive
Contracting: The Understandability of FAIR Act Inventories Was Limited,
GAO/GGD-00-68 (Washington, D.C.: Apr. 14, 2000).
[21] See, for example, U.S. Department of Agriculture, Office of the
Chief Financial Officer, Office of Competitive Sourcing, FY07 Guidebook
for Inventories of Commercial Activities and Inherently Governmental
Activities (March 2007).
[22] Retired employees who are ICS-certified are eligible to be hired
on an hourly basis to fight fires and respond to other emergencies.
[23] Pub. L. No. 109-54 § 422(e), 119 Stat. 499, 554-55 (Aug. 2, 2005);
and Pub. L. No. 110-5, § 104, 121 Stat. 8, 9 (Feb. 15, 2007) (operates
to retain this requirement in fiscal year 2007). Section 422(e) states
the following: "determine whether any of the employees concerned are
also qualified to participate in wildland fire management activities;
and take into consideration the effect that contracting with a private
sector source would have on the ability of the Forest Service to
effectively and efficiently fight and manage wildfires."
[24] For fiscal year 2008, the Forest Service is prohibited from using
any fiscal year 2008 funds for "competitive sourcing studies and
related activities involving Forest Service personnel." Consolidated
Appropriations Act, 2008, Div. F, § 415(a), Pub. L. No. 110-161 (Dec.
26, 2007).
[25] The Forest Service uses job codes to track its competitive
sourcing program costs, which are established in its Foundation
Financial Information System. The job codes are used to track costs
related to things such as salary, travel, consultancy services, or
supplies.
[26] Specifically, the Consolidated Appropriations Act, 2004, requires
agencies to report on "actual savings, or a quantifiable description of
improvements in service or performance, derived from the implementation
of competitions" for the previous fiscal year. Pub. L. No. 108-199,
Div. F, Title VI, § 647(b)(7), 118 Stat. 3, 361 (Jan. 23, 2004).
[27] OMB provides this guidance annually. The guidance did not change
substantially for fiscal years 2004 through 2006. See footnote 4.
[28] GAO, The Standards for Internal Control in the Federal Government,
GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).
[29] The Forest Service reported that the savings accrued over a 20-
month period between February 2005 and September 2006.
[30] According to the circular, work performed by a commercial source
cannot automatically revert to government (in-house) performance.
Specifically, before the government may perform the work currently
being performed by the private sector, an A-76 competition must be used
to determine whether the government should perform the activity.
[31] OMB Circular No. A-76 may be accessed at [hyperlink,
http://www.whitehouse.gov/omb/circulars/index.html] (last visited Oct.
22, 2007).
[32] Pub. L. No. 105-270, 112 Stat. 2382 (Oct. 19, 1998).
[33] Executive Office of the President and OMB, The President's
Management Agenda (2001), available at [hyperlink,
http://www.whitehouse.gov/results/agenda/index.html] (last visited
Sept. 6, 2007).
[34] USDA-Forest Service, Report to Surveys and Investigations Staff,
Committee on Appropriations, U.S. House of Representatives,
Implementation of the Competitive Sourcing Initiative at the U.S.
Forest Service, at i, 3, 4, 9 (Mar. 2004).
[35] The circular was first issued in 1966 and last revised in 2003.
See OMB Cir. No. A-76, ¶ 4 (June 14, 1999), ¶ 2 (May 29, 2003).
[36] When 65 or fewer full-time employees or its equivalent (FTEs) are
required to perform the commercial activity being evaluated, OMB
Circular No. A-76 permits a federal agency to perform a streamlined
competition, which is faster and less costly to conduct than a standard
(i.e., regular) competition because of the abbreviated and less complex
procedures required. Under older versions of the circular, the
"competition" held under stage two was called a "cost comparison." See
OMB Cir. No. A-76, ¶ 7; app. D at D-3 (definition for "competition").
[37] USDA OCFO, Guidance for Determining the Feasibility of Conducting
Competitive Sourcing Competitions, Bulletin 2004-001 (May 11, 2004).
The bulletin lists 13 categories of information that are needed to make
this determination, such as Business Needs Assessment, Market Research,
Cost/Benefit Analysis, Acquisition Strategy, and Requirements.
[38] USDA Forest Service-FY 2004 Budget Justification, at 1-6 (Feb. 3,
2003), available at [hyperlink, http://www.fs.fed.us/aboutus/budget/]
(last visited Oct. 22, 2007).
[39] H.R. Rep. No. 108-195, at 107 (2003); S. Rep. No. 108-89, at 8
(2003).
[40] Department of the Interior and Related Agencies Appropriations
Act, 2004, Pub. L. No. 108-108, § 340(d)(3), 117 Stat. 1241, 1316 (Nov.
10, 2003).
[41] Department of the Interior and Related Agencies Appropriations
Act, 2005, Pub. L. No. 108-447, div. E, § 332(a)(3), 118 Stat. 2809,
3100 (Dec. 8, 2004); Department of the Interior, Environment, and
Related Agencies Appropriations Act, 2006, Pub. L. No. 109-54, §
422(a)(2), 119 Stat. 499, 554 (Aug. 2, 2005).
[42] As the U.S. Supreme Court has stated: "There is, of course, no
more persuasive evidence of the purpose of a statute than the words by
which the legislature undertook to give expression to its wishes."
United States v. American Trucking Associations, Inc., 310 U.S. 534,
543 (1940); see Mallard v. U.S. District Court, 490 U.S. 296, 300-02
(1989); B-302973, Oct. 6, 2004; B-288173, June 13, 2002.
[43] Pub. L. No. 108-108, § 340(f); Pub. L. No. 108-447, § 332(b); Pub.
L. No. 109-54, § 422(b).
[44] The term "competitive sourcing" originated with the Department of
Defense in the late 1990s. GAO, DOD Competitive Sourcing: Results of
Recent Competitions, GAO/NSIAD-99-44 (Washington, D.C.: Feb. 23, 1999),
at 2. Its use in connection with the spending limitations, however,
appears to have its origins in the 2001 PMA. Prior to 2001, the term
"competitive sourcing" does not appear within the commercial activities
executive guidance, such as the 1999 version of OMB Circular No. A-76,
or statutes, such as the FAIR Act. However, the term appears in related
executive guidance and statutes after the launch of the PMA, such as
the 2003 version of OMB Circular No. A-76 (e.g., "competitive sourcing
quarterly reports" and "competitive sourcing officials") and the
Consolidated Appropriations Act, 2004, Pub. L. No. 108-199, § 647(b),
118 Stat. 3, 361 (Jan. 23, 2004) (e.g., "report on the competitive
sourcing activities" of the agency).
[45] For example, in the context of OMB Circular No. A-76, a study
could reasonably include or exclude the postcompetition stage
activities, such as performance monitoring and reporting. In this
regard, the circular appears to include them in its description of the
competitive sourcing process. See OMB Cir. No. A-76, app. B, fig. B1,
at B-4; fig. B2, at B-6. On the other hand, the spending limitations'
statutory definition of a "competitive sourcing study" is similar to
the definition of a "competition" under the current version of OMB
Circular No. A-76, or a "cost comparison" under older versions. The
current version of OMB Circular No. A-76 defines a "competition" as a
"formal evaluation of sources to provide a commercial activity that
uses pre-established rules (e.g., the FAR, this circular) . . .
includ[ing] streamlined and standard competitions performed in
accordance with this circular." The supplement to the 1999 version of
OMB Circular No. A-76 defined a "cost comparison" for the "activity
under study" as "the process whereby the estimated cost of Government
performance of a commercial activity is formally compared, in
accordance with the principles and procedures of this Circular and
Supplement, to the cost of performance by commercial or ISSA
[interservice support agreement] sources."
[46] Memorandum from Chief Dale N. Bosworth, Forest Service, to Charles
Christopherson, CFO, USDA, Revised USDA Forest Service Competitive
Sourcing "Green Plan": FY 2005-2009, Dec. 23, 2005; Letter from L.
Benjamin Young, Jr., Assistant General Counsel, USDA, to F. Abe Dymond,
Assistant General Counsel, GAO, June 14, 2007 (Young Letter).
[47] Young Letter at 3. Because the Forest Service, a USDA agency,
receives legal assistance from the USDA Office of General Counsel
(OGC), we solicited the General Counsel's legal views.
[48] For example, in 2004 the House committee noted its concern about
how the Forest Service had implemented the competitive sourcing
"initiative" because it "has looked into this issue in detail and found
a number of cases of mismanagement of this effort" and thus addressed
"this issue" in bill language by "limiting the use of funds for
competitive sourcing efforts." H.R. Rep. No. 108-542, at 111 (2004).
The fiscal year 2004 conference committee report stated that the
committee was concerned about the failure to budget adequately for the
cost of implementing the competitive sourcing initiative and that
"significant sums" were being expended on the competitive sourcing
initiative "at the expense of critical, on-the-ground work." H.R. Conf.
Rep. No. 108-330, at 85-86 (2003); see also H.R. Rep. No. 108-195, at 8-
10.
[49] H.R. Rep. No. 108-195, at 8-10, 107. According to information the
Forest Service provided to GAO, the cost of complying with the FAIR Act
is negligible compared to the costs of conducting the other activities
associated with the competitive sourcing program.
[50] According to the USDA OGC, the spending limitations do not apply
to activities required by the FAIR Act but do apply to competitions,
postcompetition accountability activities, and "all activities leading
up to a determination of whether a competition of a commercial activity
identified by a FAIR Act inventory should be conducted." Young Letter
at 3.
[End of section]
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