Office of Management and Budget Circular A-76

GAO was requested to assist in a review of the Office of Management and Budget (OMB) Circular A-76. Of particular interest was the cost of its implementation versus potential cost savings within the Veterans Administration's (VA) Department of Medicine and Surgery and the effect contracting out will have on the provision of medical care by VA. Because GAO has not done any reviews which address these issues, it was requested to respond to two related areas of interest: (1) the historical perspective of OMB Circular A-76; and (2) examples of the types of reviews GAO has made concerning the implementation of the circular. In January 1955, the predecessor of OMB initiated a program to curtail some of the Federal Government's commercial or industrial activities. Although the basic policy of relying on the private sector to supply the Government's needs has remained the same, the guidelines and implementing procedures have been modified. OMB departed from its original practice of issuing bulletins and issued OMB Circular A-76. Primarily, OMB wanted to restate the policy in a circular because a bulletin was generally considered to be a less permanent directive. The reports over the years have generally demonstrated a need for more effective implementation of the A-76 policy by the executive branch. They do not support a broad conclusion that one method of performance is always preferred over the other. They do demonstrate that circumstances vary and each situation requires individual analysis. The Department of Defense has devoted considerable time and effort to implementing the A-76 policy and, consequently, most of the reports concern that agency. These reports involve a wide assortment of functions, ranging from individual types of services to total installation support for a number of services. Basically, the more recent reviews have involved evaluations of either the propriety of a specific contracting out decision at a given location or a more comprehensive review of an agency-wide or Government-wide nature, possibly involving several types of commercial or individual activity.