Teleprocessing Services Contracts for the Support of Army and Navy Recruitment Should Be Recompeted

In response to a congressional request, GAO investigated the conditions that led to the award of teleprocessing services contracts to support the Army and Navy recruiting efforts and determined whether these contracts should be immediately recompeted.

Both services acquired the teleprocessing services from the same contractor efforts and both are experiencing high cost overruns. The Army's initial cost projection of $8.5 million for the life of the contract currently projects a cost of about $120 million, and the Navy's initial cost projection of $524,000 now projects a cost of about $13 million. Both services used benchmarks to evaluate the proposals, and neither benchmark adequately represented the actual workload subsequently placed on the system. As a result, the benchmarks were a poor indication of system life costs. Computer resources used by both the services greatly exceeded the amount anticipated. Because the contractor submitted an unbalanced proposal in which commercial rates were charged for teleprocessing services beyond the projected level, both services incurred costs beyond those expected. Further, the lack of appropriate management controls has contributed to the problem of excessive costs. The Army's workload projection did not include the support of some recruiting and reenlistment activities outside the United States, an increased number of users accessing the system at the same time, and a planned addition to the system. Although the number of Army enlistments decreased by 18 percent, the cost for teleprocessing services almost tripled. The Navy underestimated the number of users accessing the system at the same time and used a benchmark that did not represent the system's programs and transactions. While Navy enlistments have increased by 3 percent, the cost for teleprocessing services had doubled.

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: Carl R. Palmer Team: General Accounting Office: Accounting and Financial Management Division Phone: (202) 275-4649