Information From Previous Reports on Various Aspects of Contracting Out Under OMB Circular A-76

GAO reviewed whether government agencies were contracting out work under Office of Management and Budget (OMB) Circular A-76 at costs that might be greater than would be incurred if federal employees did the work.

GAO selected functions that had been contracted out for at least 3 years to compare contract costs, including modifications, with the contract costs used in the cost comparisons required under OMB Circular A-76. GAO found that: (1) out of 20 functions, all but 1 had increased contract costs; (2) the cost of functions that remained in-house also had increased due to wage rate increases and mission changes; and (3) the number of employees, wages, and fringe benefits paid to employees are instrumental in the decision to contract out or keep the function in-house. GAO also found that contractors could perform the work at less cost than the government primarily because the contractors used fewer employees and contractors pay scales were lower than the government's. GAO had not made an estimate of the potential savings if the A-76 program were fully implemented; however, it was noted in a 1982 study that estimated savings from implementing the program governmentwide would be $1.1 billion a year.