Contracting Out for Commercial Activities and Services Under OMB Circular A-76

GAO discussed the problems involving implementation of the Office of Management and Budget (OMB) Circular A-76 program, requiring government agencies to procure commercial goods and services from the private sector when it is cost-effective to do so. GAO found that: (1) federal agencies have not fully implemented the program because of difficulties in defining the requirements for services and in accurately estimating potential costs; (2) problems with the performance work statement (PWS) often resulted in inaccurate savings estimates; and (3) inadequate PWS caused errors or ambiguities in contract cost increases. GAO also found that: (1) employees undergoing an A-76 study face uncertainties which can result in low morale and reduced productivity; and (2) 74 percent of 2,535 federal employees it surveyed whose activities were contracted out found other government jobs, many at a lower grade. GAO believes that implementation of the program will be difficult without proper incentives and legislation.