DOD Competitive Sourcing

In late 1995, the Defense Department (DOD) began encouraging the services and defense agencies to conduct competition between the public and private sectors to determine who would be responsible for performing some functions now being provided in-house. These competitions were to be done in accordance with Office of Management and Budget Circular A-76, which provides guidance for the competitions, and were expected to yield significant savings that could be used to fund other priority needs, such as modernization. DOD components are now beginning a significant number of these public-private competitions using the A-76 process. This report (1) determines the number of sourcing competitions completed between October 1995 and March 1998 and whether the competitions had been done in accordance with applicable procedures; (2) compares characteristics, such as outcomes of recent competitions, with previous competitions in terms of winners of the competitions, time required to complete the competitions, savings produced, and other relevant metrics: and (3) identified the extent of any problems in implementing the results of the competitions, and plans for government monitoring of contracts awarded as a result of outsourcing.

GAO noted that: (1) the Air Force held the vast majority of competitions completed between October 1995 and March 1998--41 of 53; (2) likewise, 85 percent of the positions competed were in the Air Force; (3) while the number of recently completed competitions is small, the agency procedures and GAO's analysis of a sample of completed cases indicate that DOD components are conducting these competitions in accordance with Office of Management and Budget Circular A-76 guidelines; (4) additionally, GAO identified only ten appeals under the A-76 administrative appeal process, with only one being upheld; (5) the private sector won about 60 percent of recent competitions compared to about 50 percent prior to 1995; (6) also, the time to complete single and multiple function competitions was 18 and 30 months, respectively, compared to an average of about 51 months for all prior competitions; (7) further, the competitions show significant potential for savings, largely driven by personnel reductions; (8) however, the data is too limited at this point to reach any conclusions about trends, and questions exist about the precision and consistency of savings estimates; (9) moreover limitations continue to exist in DOD databases used to record savings from A-76 competitions and their usefulness for tracking changes over time; (10) actions are still required to ensure that improvements are made in these databases and savings estimates from completed competitions are tracked over time; (11) the relatively few implementation problems were independent of whether the private or public sector had won the competition; (12) for example, a storage and warehousing contract was terminated for poor performance after a 19-month performance period; (13) in another case, full implementation of a public maintenance operation was delayed 17 months due to a delay in being able to recruit enough personnel to perform the work; and (14) lastly, resources expected to be devoted to monitoring contracts awarded to the private sector varied depending on the size and complexity of the functions being reviewed.

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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