Achieving Cost Efficiencies in Commercial Activities

GAO discussed the Office of Management and Budget's (OMB) Circular A-76 Program, designed to encourage competition between the federal work force and the private sector for providing commercial services to government agencies, and the potential impact of proposed legislation that would require a commercial activities cost study program. GAO noted that: (1) agencies did not fully accept the A-76 program, which had not met its objectives for more efficient and effective government operations; (2) the Department of Defense used the program more than any other agency, but stated that the program was time-consuming, difficult to implement, disruptive, and threatening to staff; (3) Congress excluded certain activities or locations from the program and imposed other restrictions; and (4) the absence of work-load data and adequate cost accounting systems extended study times and contributed to poorly defined performance requirements. GAO also noted that the proposed legislation: (1) required agencies to inventory commercial activities and conduct cost comparisons; (2) required agencies to calculate all relevant costs of performing a commercial activity; and (3) included provisions to help displaced employees, although those provisions could also increase the time required to perform cost studies. GAO believes that further consideration is needed of the proposed legislation's provisions regarding agency performance standards, enforcement, information collection, periodic surveys of commercial activities, efficiency goals, contractor involvement in government work, the U.S. Postal Service, and disputes resolution.