Competitive Contracting

The Federal Activities Inventory Reform (FAIR) Act of 1998 requires government agencies to submit each year to the Office of Management and Budget inventories of activities that, in the judgment of the agency head, are not inherently governmental functions. This report describes the initial implementation of the FAIR Act and examine inventories of inherently governmental activities at the following agencies: the Departments of Commerce and Transportation, the General Services Administration, and the Environmental Protection and Federal Emergency Management Agencies. GAO (1) describes the act's initial implementation, (2) analyzes the clarity and understandability of FAIR act inventories at the five agencies, (3) examines the extent to which these agencies exempted commercial activities from competition, and (4) identifies supplemental information that enhances the understandability of the agencies' inventories.

GAO noted that: (1) 98 executive agencies developed and published inventories of their commercial activities under the FAIR Act's first year of implementation, identifying about 904,000 full-time equivalent employees performing commercial activities; (2) compared to prior efforts to inventory commercial activities, the initial implementation of the FAIR Act increased the number of agencies identifying and reporting on their commercial activities and increased the amount of information about agencies' commercial activities that is publicly available; (3) however, the clarity and understandability of the five FAIR Act inventories GAO reviewed was limited; (4) Office of Management and Budget's (OMB) June 1999 list of function codes used by agencies to characterize the types of commercial activities they perform was incomplete; (5) because OMB allowed agencies to use an expanded list of function codes for their FAIR Act inventories that was not contained in OMB's June 1999 guidance, it may have been more difficult for interested parties who did not have the expanded list to identify the activities agencies are performing; (6) function codes on both the official and expanded lists are vague, and OMB has not defined them; (7) agency officials said that OMB's function codes were not adequate to clearly categorize the commercial activities that their employees perform; (8) the five agencies exempted a range of from 37 to 99 percent of the commercial activities they identified from consideration for competition; (9) interested parties may challenge the omission of a particular activity from, or the inclusion of a particular activity on, an agency's inventory; (10) however, since the FAIR Act does not require that commercial activities be competed, it does not provide for challenges to agencies' decisions to exempt commercial activities listed on the inventories from competition; (11) some of the supplemental information that the five agencies included enhanced the understandability of the FAIR Act inventories; (12) for example, although the FAIR Act does not require agencies to identify their inherently governmental activities, the General Services Administration's (GSA) inventory listed both its commercial and inherently governmental activities; and (13) including this information provided a fuller perspective about the range of activities that GSA performs.

Recommendations

Our 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.

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