Contracting Out of Selected In-House Commercial and Industrial-Type Activities at the U.S. Military Academy, West Point, New York

An audit was performed of the costs of performing four functions with in-house personnel, and by contract. The functions were: custodial services, laundry and drycleaning, and refuse collection at the U.S. Military Academy (USMA); and maintenance services at the Stewart Army Subpost (STAS). The maintenance services at STAS had been contracted out for over a year, and the other three functions at USMA were being contracted out after cost comparisions were made in accordance with the Office of Management and Budget (OMB) Circular A-76.

The actual first year savings at STAS exceeded the cost comparison estimated savings, and the laundry and drycleaning contract and refuse contract will result in sufficient savings to justify contracting out. The custodial services cost comparison indicated that contracting out would not generate sufficient savings to meet the minimum OMB requirements. Because of time constraints, the USMA estimate of first year costs for in-house performance was not verified. The original estimate prepared under the old A-76 guidance was reviewed, and results indicated that the current estimate could have been even higher under the current A-76 guidance, thereby increasing the savings by contracting out. Certain elements in the cost comparison for custodial services were found to be questionable. The proposed contract price for the services was understated due to the outdated wage determination that was supplied to the offerors. If the offerors had been supplied with the correct wage determination, their proposed prices could have increased considerably. The cost of contract administration was understated because USMA determined the cost by taking 4 percent of the contract cost instead of the actual expected cost of contract administration. OMB Circular A-76 requires that cost comparisons be aimed at the full cost, to the maximum extent practical in all cases. Because of these changes, other adjustments to the cost of contracting out would also be necessary.

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.

Director: No director on record Team: No team on record Phone: No phone on record