Defense Outsourcing

This report discusses whether the Defense Department's (DOD) outsourcing, or contracting out, of commercial activities reduced the availability of rotational billets for active duty military personnel. On the basis of its initial inquiries, GAO found that problems regarding the impact of outsourcing on rotational assignments were occurring mainly within the Navy. As a result, GAO focused its review on the Navy. GAO addresses (1) how the Navy's current outsourcing efforts have affected rotational billets and (2) whether the Navy has policies and procedures in place to minimize the impact of outsourcing on rotational billets in the future.

GAO noted that: (1) several Navy Office of Management and Budget Circular A-76 competitions announced for study in fiscal years (FY) 1997 and 1998 have the potential to eliminate military billets in areas where rotational shortages exist for personnel returning from sea duty; (2) as a result, the Navy has decided not to begin some of these A-76 studies and plans to reinstate funding authorization for the military positions eliminated when the studies were announced; (3) until recently, the Navy had not developed specific policies and coordination procedures to protect rotational billets from outsourcing considerations; (4) according to Navy officials such policies and procedures were not needed prior to FY 1997 because the Navy's outsourcing initiatives were limited and not centrally managed; (5) in May 1997, Navy officials signed a memorandum of agreement specifying a coordination process between the Navy's headquarters infrastructure officials and military personnel representatives to ensure that consideration is given to rotation requirements when determining potential functions for outsourcing; (6) this memorandum of agreement was further strengthened in September 1997 by a more detailed Navy-wide memorandum of agreement that applied to all major commands, which the Navy refers to as major claimants, for all infrastructure reductions, including outsourcing; (7) this coordination policy should prove important since the Navy's goal is to have completed A-76 competitions for 80,500 positions by the year 2002, including about 10,000 military billets; (8) the Navy expects that its outsourcing efforts will produce savings and accordingly has programmed expected savings of $2.5 billion into its future years defense plan for FY 2000 through 2003; (9) the Navy has not identified the specific activities and locations that will be studied to achieve projected savings, but has tasked its major commands with recommending specific activities and locations for A-76 competitions to meet this savings goal; (10) the Navy recently began a series of planning conferences involving appropriate officials from headquarters and major commands focusing on strategies for attaining its future years' outsourcing goals; (11) however, given the Navy's plans for outsourcing competitions, ongoing coordination and improved planning between headquarters and major commands is needed to reach agreement on realistic goals and timeframes; and (12) in addition, improved planning and coordination could minimize the elimination of required military shore billets, as well as avoid prematurely programming savings into future years' budgets.

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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