DOD Competitive Sourcing

The Defense Department (DOD) is using competitive sourcing through the Office of Management and Budget Circular A-76 process to save an estimated $6 billion in support costs between 1997 and 2003, with more than $2 billion in savings expected annually thereafter. This report reviews the program's progress, focusing on the likelihood that it will achieve the estimated savings. GAO (1) identifies the competition and savings goals, (2) assesses the accuracy of the savings estimates provided to Congress, and (3) evaluates the adequacy of planning to support the overall program.

GAO noted that: (1) DOD has underway an unprecedented program to use competitions to gain economies and efficiencies in its operations and to reduce support costs; (2) while the numbers have evolved over time, as of now, DOD is planning to open over 229,000 government positions to competition within the public and private sectors over the next several years; (3) it estimates $6 billion cumulative savings between FY 1997 and FY 2003, and $2.3 billion in recurring savings each year thereafter, as a result of these efforts; (4) however, estimates of competitive savings provided to Congress in FY 1998 are overstated, and several issues are likely to reduce the estimated savings, at least in the short-term; (5) DOD has not fully calculated either the investment costs associated with undertaking these competitions or the personnel separation costs likely to be associated with implementing them; (6) further, there are numerous indications that DOD components have already begun to experience difficulties in launching and completing the competitions within the timeframes they initially projected; (7) as a result, the achievement of savings may be delayed; (8) various officials have expressed concern about the effects of not achieving the expected savings because reductions in future operating budgets have already been planned in anticipation of these savings; (9) comprehensive planning to identify specific functions and locations for competition among the services has been limited; (10) within individual military services, it has largely been up to individual installations or major commands to identify and prioritize specific activities and functions for study and to conduct competitions; and (11) the one service that has carried out a comprehensive assessment, the Air Force, has identified a potential shortfall in viable candidates for competition.

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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