OMB Circular A-76

Pursuant to a congressional request, GAO reviewed an Army contract for logistics support services at Fort Sill, Oklahoma, focusing on: (1) whether the Army realized the estimated savings from contracting its requirements; and (2) contractor performance.

GAO found that: (1) the Army initially estimated a $2.7-million savings over 5 years based on estimated contract costs of $53.2 million; (2) a more recent estimate of at least $68 million indicated that contract costs would be higher than estimated in-house costs; (3) although in-house costs would also have risen, they would have remained significantly lower than the adjusted contract costs; (4) it would be difficult to offset the cost increases, since little time remained in the contract and the major cost component, labor, was not easily adjustable; (5) the decline in productivity from in-house levels resulted in approximately $1.8 million in excess direct labor costs and affected equipment readiness; (6) the estimated $14.8 million in increased contract costs could increase if productivity failed to improve; (7) contrary to Army instructions, Fort Sill paid the contractor the entire available award fee for meeting minimum performance standards; (8) in two of the three logistics contract components, the level of contractor performance fell below the standard set by the in-house staff; (9) the contractor's internal controls over supply inventory recordkeeping and inventory management were inadequate; and (10) the Army failed to provide adequate contract oversight.

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.

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