.I 1.. L ii - .._... -------I._.-.-.- . _._.. I~nilcvl -. .. ‘__. .._I”“...“__ll”-ll.ll”- States----- (;c~tlc~ral -...------._---- ------~ Ac~v~r~rrlir~g Ol’l’iw .--.. --.---_ -.-.--- -. ___.._ _. .._ ..^_” ____ - ._...__^..._ -_..._- _-..---- .__--__-_ ARMY Ma,, l!NO PROCUREMENT Status of Commercial Activities Study at White Sands Missile Range - -. --.. a I UI 141273 _,--.----~-1---~---1- -...--.- . --_._______ _______- ~;Ao,iNSIAI~-!~o-l~i~~ United States General Accounting Office Washington, D.C. 20648 National Security and International Affairs Division B-236299 May 3,199O The Honorable John Conyers, Jr. Chairman, Committee on Government Operations House of Representatives Dear Mr. Chairman: This responds to your October 11, 1989, request and subsequent discus- sions with your office regarding the status of the ongoing commercial activities study at the White Sands Missile Range. You had expressed concern about the prolonged nature of this study. On February 26, 1990, we briefed your office on the results of our work. The purpose of this letter is to summarize the information discussed at that meeting. The commercial activities study at White Sands has been ongoing for Results in Brief over 6 years and has been in a test mode for the past 2 years. Regardless of the decision to keep the functions in-house or contract them out, White Sands officials do not believe that it can accomplish the body of work that needs to be performed with the expected funding level. Addi- tionally, it does not appear that White Sands will be able to make a deci- sion on whether or not to contract out the functions by August 1990, as directed by the fiscal year 1990 Appropriations Conference Committee. Office of Management and Budget Circular A-76-“Performance of Background Commercial Activities” -requires agencies to study their existing com- mercial activities to determine whether it is more economical to perform these activities in-house or under contract with commercial sources. An initial step in this study is to define and describe the government’s work requirements in a performance work statement, which serves as the basis for soliciting contractor bids. In addition, the agency must con- duct a management study of its existing activity to determine the most efficient organization needed to accomplish the performance work state- ment tasks with in-house personnel. The resulting organizational plan is used to develop the in-house cost estimate, which is compared to bids received from contractors. The comparison of in-house and contractor costs serves as the basis for deciding whether to retain the activities in- house or to award a contract. Before in-house activities can be converted Page 1 GAO/NSIAD-90-165 White Sands Commercial Activities Study B-236233 to commercial contracts, the contractor’s proposal must indicate at least a lo-percent savings in personnel costs. In August 1983, the Department of the Army notified the Congress of its Events Affecting the intent to conduct a commercial activities study of installation support White Sands activities at White Sands to determine whether functions such as main- Commercial Activities tenance of real property and equipment and supply and transportation services might be performed more economically under contract. Since its Study announcement, a reduction-in-force, personnel hiring freezes, and con- strained funding levels have taken effect at White Sands. As a result, White Sands has not been able to complete the commercial activities study. Table 1 shows the schedule White Sands established for con- ducting the study and making a decision on whether to keep the work in-house or contract it out. White Sands has been unable to meet this timetable. It does not favor continuing the study, but it has not been successful in convincing higher headquarters of the need to cancel the study. Table 1: Key Events In the White Sands Study Event Date White Sands study announced to the Congress August 1983 Performance work statement and most efficient organization January 1987 completed Pilot test approved for testing the most efficient organization March 1987 Most efficient organization and pilot test implemented September 1987 Test extended December 1988 Bids solicited April 1990a Solicitation closed August 1990 Proposals evaluated September 1990 f%st and final offers received April 1991 Cost comparison completed July 1991 Decision announced October 1991 Contract awarded November 1991 aEvent had not yet occurred as of April 6, 1990. A matter that needs to be considered is the recent direction by the fiscal Recent Appropriations year 1990 Appropriations Conference Committee in response to con- Conference Committee cerns regarding the length of time required to complete commercial Direction * activities studies. In this regard, the conferees directed that commercial activities studies that exceed 2 years for a single function or 4 years for a multifunction study must reach an initial decision by August 31, 1990, Page 2 GAO/NSIAD-90-165 White Sands Commercial Activities Study . -l \ 5226222 or be terminated and the activity converted to the most efficient organi- zation The White Sands’ study, which is a multifunction study, has been ongoing for over 6 years, and a decision is not anticipated until late 1991. The Department of Defense (DOD) plans to issue a policy statement on its interpretation of the conference report language regarding the termina- tion of ongoing commercial activities studies. At the time we completed our review on April 6, 1990, DOD had not issued its policy statement. After reviewing the 1987 most efficient organization and performance ResourceConstraints work statement, White Sands was concerned that the documents did not Affected Testing the adequately capture the staffing and work load requirements and that Most Efficient implementation of the most efficient organization would not support the mission, Because of these concerns, it was decided to conduct a l-year Organization and the test of the organization to refine it, as well as the performance work Performance Work statement, based on the actual experience gained during the test period. Statement According to White Sands officials, it has not been able to fully imple- ment and test the organizational plan and performance work statement because it has not had the necessary resources-personnel and funds- to accomplish the identified work. Before the most efficient organization was implemented, a reduction-in-force took effect at White Sands to bring the staffing level in line with it. Then a hiring freeze was insti- tuted, which prevented White Sands from hiring personnel with the needed skills. As a result, it has not been able to fill the positions. Fur- thermore, the hiring freeze and budget constraints have continued dur- ing most of the pilot test period. Therefore, in December 1988, the Army agreed to extend the test period for an additional year. White Sands officials also told us that constrained budgetary resources during the second year of the test continued to prevent it from staffing up to the 1987 level and performing the work identified in the work statement. One official said that, during the 2-year test period, White Sands was operating at 86 to 96 percent of the 1987 staffing level. Page 8 GAO/NSIAIMO-165 White Sands Commercial Activities Study , lr ’ : E236299 At the time the test period was extended, an April 1990 milestone for Milestones for soliciting bids from outside sources was established. White Sands offi- Completing the Study cials now say that this milestone cannot be met because the current hir- and Soliciting Bids ing freeze prevented it from filling 11 vacant positions that are needed to complete the in-house cost study. At the time we completed our work, Cannot Be Met White Sands officials had not yet revised the milestones for completing the study or soliciting bids. Furthermore, the officials do not believe that an initial decision to keep the work in-house or contract it out can be made by the August 1990 deadline established in the conference report. Officials also told us that the 1987 work statement and organizational plan have been updated to reflect the fiscal year 1989 work load per- formed by the Directorate of Engineering, Housing and Logistics. Addi- tionally, in certain cases the work load has been adjusted to reflect an increase in the frequency of some tasks-such as the maintenance of vehicles, heaters, and boilers-over what is currently being performed’ by the Directorate of Engineering, Housing and Logistics. The revised work statement has been approved by White Sands officials but has not been submitted to the U.S. Army Test and Evaluation Com- mand or the Department of Army for approval. The revised organiza- tional plan is expected to be submitted to White Sands officials for its approval in mid-April. Initially, the Chairman of the Committee on Government Operations Objectives, Scope,and asked us to determine the status of the study and to evaluate whether Methodology White Sands was properly defining the scope of work for which it planned to solicit bids from outside sources. However, because the study is still ongoing and had not reached the point of approval for soliciting bids, we cannot state an opinion on whether the scope of the work will properly reflect the work for which bids will be sought. To address the status of the study and the progress being made to com- plete it, we held discussions with officials at the Office of the Secretary of Defense; Headquarters, Department of the Army; and the White Sands Missile Range, New Mexico. We reviewed documents, regulations, and other pertinent records related to the activities and functions included in the White Sands study. We also interviewed union officials ‘The frequency of these tasks was reduced because of insufficient funding and personnel levels. Page 4 GAO/NSIAJMO-105 White Sands Commercial Activities Study * E-226222 at White Sands and at the union’s headquarters in Washington, DC., to obtain their views of the study. As requested, we did not obtain official agency comments on this report. However, we discussed its contents with Army Headquarters and DOD officials and incorporated their views where appropriate. We conducted our review between November 1989 and April 1990 in accordance with generally accepted government auditing standards. We are sending copies of this report to interested congressional commit- tees, other Members of Congress, and the Secretaries of Defense and the Army. Copies will be made available to other parties upon request. If you or your staff have any questions concerning the information presented in this letter, please call me at (202) 2764141. Other major contributors are listed in appendix I. Sincerely yours, Richard Davis Director, Army Issues Page 5 GAO/NSIAIMJO-165 White Sands Commercial Activities Study , Appendix I Major Contributors to This Report Robert J. Lane, Assistant Director, Army Issues National Security and Nancy T. Lively, Evaluator-in-Charge International Affairs Division, Washington, D.C. (393373) Page 6 GAO/NSIAD4O-165 White Sands Cknnmercial Activities Study I, -..--- .-..---.- I._ . ..- .-------- First,4 lass M;r.i I Postage & Ptwi hid GAO Pchrmit, No. G100
Army Procurement: Status of Commercial Activities Study at White Sands Missle Range
Published by the Government Accountability Office on 1990-05-03.
Below is a raw (and likely hideous) rendition of the original report. (PDF)