Competitive Contracting

Pursuant to a congressional request, GAO addressed congressional concerns on various issues concerning the redrafts of H.R. 716 and S. 314, the Freedom From Government Competition Act.

GAO noted that: (1) it found that savings achieved through the Office of Management and Budget (OMB) Circular A-76 competitive process were largely personnel savings, the result of closely examining the work to be done and reengineering the activities in order to perform them with fewer personnel, whether in-house or with contractors; (2) despite the difficulties and continuing challenges in implementing the Chief Financial Officers Act, the efforts have already resulted in marked improvements in federal financial management and, once fully implemented, agencies will be able to produce reliable financial information; (3) officials from most state and local governments said that monitoring contractors' performance was the weakest link in their privatization process; (4) the government's lack of complete cost data has increased the difficulty of carrying out the competitive process, because the government is not able to accurately determine the cost of the function or activity it plans to compete; (5) there are few constitutional and statutory restrictions on those activities that may or may not be contracted out by the federal government, and the courts have provided little additional insight; (6) a best value offer is the private-sector offer that is considered to be the most advantageous to the government, considering past performance and other noncost factors as well as cost--it is not necessarily the lowest-priced, acceptable offer; (7) GAO has not undertaken any work related to the capacity of the Offices of the Inspectors General to oversee the implementation of H.R. 716; (8) the government's downsizing efforts have been driven more by lower appropriations levels than by specific full-time equivalent ceilings; (9) governmentwide data are not available that would identify the differences between compensation and benefits of contractors and federal employees who used to perform their work; (10) OMB is not able to provide data on the percentage of commercial activities contracting funds: (a) competed under A-76; (b) competed under an informal competitive framework; and (c) not competed at all; (11) OMB officials said that they were aware of some cases where work has been contracted-in as a result of poor contractor performance, but they do not collect data to quantify the number of cases where this has occurred; (12) as the federal government does more contracting, proper contract oversight becomes more important; (13) current drafts of the bill has reduced the role of OMB in determining which functions are inherently governmental; and (14) instead, they require agencies to make these determinations, subject to judicial review.