Public-Private Mix

Extent of Contracting Out for Real Property Management Services in GSA Gao ID: GGD-94-126BR May 16, 1994

Past GAO reports have focused on specific procedural issues relating to contracting out, such as flaws in individual cost comparisons, job losses, and related management practices. GAO has not done a broad review of whether contracting out of building services has been beneficial and cost-effective. In fact, the appropriate mix of government and private sector commercial services remains unclear. This briefing report provides historical information on the extent of contracting out by the General Services Administration and its Public Buildings Service for real property management services, such as cleaning and general maintenance of federal facilities, during fiscal years 1982 to 1992.

GAO found that: (1) the Public Buildings Service (PBS) contracted out for approximately $2 billion worth of services in FY 1992; (2) maintenance, repair, and real property and equipment services accounted for almost 20 percent of PBS service contract dollars; (3) the bulk of contracting occurred before 1985, and mostly involved the direct conversion of custodial activities; (4) from 1982 to 1992, GSA reduced its total number of full-time equivalent (FTE) positions by 4,734, with PBS accounting for 68 percent of the reduction; (5) PBS accounted for $45.7 million of the $75.8 million in savings that GSA reported for FY 1982 through 1992; (6) contractor bids for maintenance activities averaged 39 percent less than the government's cost estimate, while contractor bids were about 33 percent higher than the government cost estimates for work retained in-house; (7) while cost comparison data showed that contractors had an advantage when competing for custodial services, the government was much more competitive for maintenance services contracts; and (8) contractors were most competitive when the activity required more than 10 FTE positions.

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