DOD Competitive Sourcing

This report looks at the Defense Department's (DOD) progress in implementing its A-76 program, the impact of DOD's strategic sourcing initiative on achieving A-76 program goals, and the extent to which DOD will achieve savings from A-76 and strategic sourcing. DOD has made progress in implementing its A-76 program, but it has not advanced as quickly as initially expected. Its A-76 studies take longer than the expected average of 2 years to complete. Because they could not identify activities two positions to study under A-76, most DOD components plan to use strategic sourcing to meet some of the goals previously associated with the A-76 program. However, so far only the Navy has identified specific strategic sourcing goals that involve the review of activities of about 42,000 positions. Because of Navy's shift to strategic sourcing, DOD plans to study activities involving about 25,000 fewer positions under A-76 during fiscal years 1997-2005, an 11 percent reduction of the 229,000 previously reported. GAO's work continues to show that, although savings are being achieved, DOD's savings estimates are overstated and that strategic sourcing has added to uncertainties about the overall magnitude of savings.

GAO noted that: (1) DOD has made progress in implementing its A-76 program, but it has not advanced as quickly as initially expected; (2) while the goals have changed over time, DOD now projects studying activities which would encompass about 203,000 positions under A-76 during fiscal years 1997-2005; (3) also, because they could not identify activities with enough positions to study under the A-76 program, most of DOD components are planning to use the broader strategic sourcing approach to meet some of the study goals previously associated with just the A-76 program; (4) however, to date, only the Navy has identified specific strategic sourcing goals; it plans to review activities involving about 42,000 positions under this expanded program, including some positions previously targeted for A-76 studies; (5) because of the Navy's shift in emphasis, DOD is now planning to study activities involving about 25,000 fewer positions under A-76 during fiscal years 1997-2005--a reduction of about 11 percent of the 229,000 previously reported; (6) however, the A-76 studies are taking longer than the expected average of 2 years to complete; (7) GAO's work continues to show that while savings are being achieved, DOD's savings estimates are overstated, at least in the short term, and that strategic sourcing has added to uncertainties regarding the overall magnitude of savings; (8) DOD projects the A-76 program will generate savings of about $9.2 billion during the period 1997-2005, with recurring savings of almost $2.8 billion each year thereafter; (9) together, the A-76 and strategic sourcing study goals are expected to produce an estimated cumulative savings of almost $11.7 billion, with about $3.5 billion in recurring savings; (10) however, these estimates do not fully account for costs associated with completing the studies or implementing the results, which will reduce the amount of savings realized in the short term; (11) DOD components have begun to reduce their operating budgets based on projected savings from these programs; (12) in addition, the services are not planning to reduce military personnel end-strength as a result of these studies; (13) rather, the services will reinvest military spaces freed up as the result of these studies in other areas where personnel shortfalls exist; and (14) this practice will make additional funding for operation and maintenance accounts necessary to fund replacement civilian or contractor personnel.

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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