OMB Circular A-76

In response to a congressional request, GAO reviewed the Navy's implementation of the Office of Management and Budget's (OMB) Circular A-76 under a proposed public works contract, to determine whether the Navy's: (1) cost study and performance work statement were complete and accurate; (2) treatment of severance pay and transfers reflected the conditions at its Jacksonville air station; and (3) proposed contract award would result in increased costs to the government.

GAO found that the: (1) Navy's cost study was incomplete and ambiguous because of omissions, improper classifications, and inadequate job descriptions; (2) Navy understated costs associated with displaced federal workers, and omitted costs for periodic maintenance and recurring service work, such as equipment inspection, lubrication, and minor repairs; (3) Navy's performance work statement did not include labor hours for service calls for material costs that exceeded the threshold amount, which could increase contract quantities and costs; (4) Navy understated the materials reimbursement cost to contractors because it did not use the actual indefinite quantity materials requirements for the Jacksonville air station; (5) Navy could lose about $2.04 million of the projected $6.10 million in savings, if the contract costs increase as a result of inadequate cost study; and (6) the government could pay an additional $5.21 million to $8.14 million during the 3-year contract term.