oversight

DOD Competitive Sourcing: Questions About Goals, Pace, and Risks of Key Reform Initiative

Published by the Government Accountability Office on 1999-02-22.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  United States General Accounting Office

GAO               Report to the Chairman, Subcommittee
                  on Military Readiness, Committee on
                  Armed Services, House of
                  Representatives

February 1999
                  DOD COMPETITIVE
                  SOURCING
                  Questions About Goals,
                  Pace, and Risks of Key
                  Reform Initiative




GAO/NSIAD-99-46
                   United States
GAO                General Accounting Office
                   Washington, D.C. 20548

                   National Security and
                   International Affairs Division

                   B-279771

                   February 22, 1999

                   The Honorable Herbert H. Bateman
                   Chairman, Subcommittee on Military Readiness
                   Committee on Armed Services
                   House of Representatives

                   Dear Mr. Chairman:

                   The Department of Defense (DOD) is using competitive sourcing1 through
                   the Office of Management and Budget (OMB) Circular A-76 process as a
                   means of realizing an estimated $6 billion savings in support costs
                   between fiscal year 1997 and 2003, with over $2 billion savings expected
                   annually thereafter. You asked that we review the program’s progress with
                   an emphasis on the likelihood that it will achieve the estimated savings.
                   Specifically, we (1) identified the competition and savings goals,
                   (2) assessed the accuracy of the savings estimates provided to Congress,
                   and (3) evaluated the adequacy of planning to support the overall program.
                   Our scope and methodology are included in appendix I.

                   Under A-76, agencies conduct public/private competitions to determine
                   whether the public or private sector will perform selected activities and
                   functions. In conducting competitions for functions being performed
                   in-house, agencies carry out studies to review the current organizational
                   structures, staffing, and operating procedures and to determine the most
                   cost-efficient and cost-effective way of performing the functions.


                   DOD has underway an unprecedented program to use competitions to gain
Results in Brief   economies and efficiencies in its operations and to reduce support costs.
                   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. It estimates $6 billion
                   cumulative savings between fiscal year 1997 and 2003, and $2.3 billion in
                   recurring savings each year thereafter, as a result of these efforts.

                   However, estimates of competitive savings provided to Congress in fiscal
                   year 1998 are overstated, and several issues are likely to reduce the
                   estimated savings, at least in the short term. DOD has not fully calculated
                   either the investment costs associated with undertaking these


                   1
                    Throughout this report, we use the term competitions when referring to competitive sourcing
                   governed by the A-76 process.



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             competitions or the personnel separation costs likely to be associated with
             implementing them. For example, the Navy is the only service that has
             included some of these costs to arrive at a net savings figure. Further,
             there are numerous indications that DOD components have already begun
             to experience difficulties in launching and completing the competitions
             within the time frames they initially projected. As a result, the
             achievement of savings may be delayed. For example, Army headquarters
             estimated that a study of 4,001 positions at its Training and Doctrine
             Command would take only 24 months to complete, but the command
             expects to complete the study in 39 months. As a result, net short-term
             savings are unlikely to be achieved in the amounts or as quickly as DOD
             projected. 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.

             Comprehensive planning to identify specific functions and locations for
             competition among the services has been limited. 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. The one service that has carried out a
             comprehensive assessment, the Air Force, has identified a potential
             shortfall in viable candidates for competition.


             Since 1955, the executive branch has encouraged federal agencies to
Background   obtain commercially available goods and services from the private sector
             through competitions when the agencies determined that such action was
             cost-effective. OMB formalized the policy in OMB Circular A-76, issued in
             1966. As part of this process, the government identifies the work to be
             performed—described in the performance work statement—and prepares
             an in-house cost estimate, based on its most efficient organization (MEO),
             and compares it with the best offer from the private sector. Between 1978
             and 1994, competition winners were split between the private and public
             sectors. Appendix II contains a more detailed description of the A-76
             process.

             Because of lengthy time frames previously required to perform
             competitive sourcing studies, a provision was included in the DOD
             Appropriations Act for Fiscal Year 1991 (P.L. 101-511), and in subsequent
             DOD appropriation acts requiring that single function competitions (under




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Circular A-76) be completed within 24 months and multifunction
competitions within 48 months.2

Because of administrative and legislative constraints from the late 1980s
through 1995, there was a lull—and for some time even a moratorium—on
competitions. In 1995, congressional and administration initiatives placed
more emphasis on competitive sourcing as a means of achieving greater
economies and efficiencies in operations. The Deputy Secretary of
Defense in 1995 directed the services to make outsourcing of support
activities a priority. Subsequently, DOD placed emphasis on competitions
involving both the public and private sectors, known as competitive
sourcing.

DOD components identify functions eligible for competitive sourcing
studies from a list of commercial activities. Under OMB and DOD guidance,
the components must maintain and periodically update their lists of
commercial functions, but until fiscal year 1997, they were only required to
consider commercial positions that were not inherently governmental in
nature.3 In 1997, DOD directed its components to include inherently
governmental functions on their lists.

Because of concern over inconsistencies within and among the services in
identifying positions eligible for competition, the House National Security
Committee in report number 105-132 on H.R. 1119, the Defense
Authorization Act for Fiscal Year 1998, directed DOD to develop a uniform
set of criteria. DOD’s components are currently reviewing which functions
performed by DOD personnel are (1) inherently governmental,
(2) exempted from competition for national defense reasons, (3) exempted
from competition for other reasons, or (4) subject to competitive sourcing
competitions. DOD expected to report the results of this reassessment in
January 1999.

As we and others have reported, A-76 competitions can be cost-effective.4
Data indicates that savings can occur, regardless of whether the

2
 A single function competition could, for example, involve studying the custodial services at an
installation, while a multifunction competition could involve studying both custodial services and
refuse collection and disposal services.
3
 Under the newly enacted Federal Activities Inventory Reform Act of 1998, P.L. 105-270, executive
agencies, including DOD, will be required to publish a yearly list of its activities that are not inherently
governmental and are performed by a government source. As defined by section 5 of the act,
inherently governmental positions generally require the exercise of discretion in applying government
authority or the use of value judgments in making decisions for the government.
4
 A complete list of recent GAO reports and testimonies dealing with DOD competitive sourcing is
included at the end of this report.



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                    competitions are won by the public or the private sector. Savings may
                    increase if, in accordance with applicable legal standards, multiple
                    functions can be grouped together under a single contract rather than
                    under multiple contracts. Because the average military positions are more
                    costly than their civilian equivalents, greater savings may occur if DOD
                    converts military support positions to government civilian or contractor
                    positions.

                    While competitions can produce significant savings, caution is needed
                    when estimating the overall magnitude of potential savings. Estimates of
                    savings in the 20- to 30-percent range or higher have been cited in some
                    assessments of previous competitive sourcing studies but often have been
                    based on initial savings estimates from previous competitions, rather than
                    on actual savings over time. DOD has not systematically tracked or updated
                    the savings estimates from competitions. Further, the savings from current
                    competitions may not necessarily match those achieved in competitions
                    completed before defense downsizing—because personnel cuts carried
                    out during downsizing helped streamline organizations and eliminate
                    unneeded positions.


                    DOD  has established far greater and more aggressive goals for competitions
DOD’s Competition   than in the past. DOD also estimates that the competitions will bring
Study and Savings   significant cost savings. OMB has recognized DOD as the pacesetter among
Goals               government agencies in the use of competitions to gain economies and
                    efficiencies in operations and to reduce support costs. However, achieving
                    the goals of an initiative of this magnitude is a significant management
                    challenge.


Study Goals         According to DOD, between 1979 and 1996, it studied over 90,000 positions
                    using the A-76 process. In early 1998, DOD components outlined plans to
                    compete over 225,000 positions between fiscal year 1997 and 2003. The
                    number of positions planned for competition during this period is more
                    than twice the number of positions studied in the previous 17 years.
                    Table 1 summarizes the plans by individual components as of early 1998.




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Table 1: Positions Planned for A-76 Competition Announcement
                                                           Fiscal year
Component                   1997         1998             1999           2000            2001            2002            2003           Total
Army                      13,173       13,484           13,477           8,146          8,138                0               0         56,418
Navy                      10,500       15,000           20,000         20,000          15,000                0               0         80,500
Air Force                 13,367a      21,195           18,494         10,107                0               0               0         63,163
Marine Corps                   0            800           1,700          1,700            800                0               0          5,000
Defense agenciesb              0        2,151             6,442          3,002          2,288           6,542                0         20,425
Total                     37,040       52,630           60,113         42,955          26,226           6,542                0        225,506
                                        a
                                            Includes some positions announced in previous years.
                                        b
                                         Figures shown represent data obtained from the Defense Finance and Accounting Service,
                                        Defense Logistics Agency, and Defense Commissary Agency.

                                        Source: Services as of February 1998 and agencies as of May 1998.



                                        According to our analysis, DOD’s data indicates that about 79 percent of the
                                        positions identified in table 1 are civilian positions, while 21 percent are
                                        military positions. Over half of all the military positions to be competed
                                        are in the Air Force. The greatest number of positions competed would
                                        occur during fiscal years 1999 and 2000. As indicated in figure 1, if DOD
                                        components launch the competitions projected for fiscal years 1999 and
                                        2000, and if each competition lasts 24 months, DOD could be competing
                                        over 100,000 positions each year during 1999 and 2000.5




                                        5
                                         The DOD budget guidance planning factor for the duration of its A-76 studies is 24 months.



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Figure 1: Positions Potentially Under
A-76 Competition Between Fiscal Year
1997 and 2003                           Number of positions
                                        120,000

                                                                                  FY
                                                                                  98
                                        100,000                                               FY
                                                                                              99

                                                                      FY
                                         80,000                       97



                                                                                                          FY
                                         60,000                                                           00
                                                                                  FY
                                                                                  99
                                                                      FY
                                                                      98
                                         40,000                                               FY
                                                          FY                                  00
                                                          97                                                          FY
                                                                                                                      01
                                                                                                          FY
                                         20,000                                                           01


                                                                                                                    FY 02         FY 02
                                                 0
                                                        1997        1998        1999       2000     2001            2002          2003
                                                                                        Fiscal year



                                        Note: The dark grey areas in the bars indicate competitions begun in the previous year.

                                        Source: Our calculations based on information from DOD.




                                        Between March 1997 and early 1998, DOD increased the number of
                                        positions it plans to compete over the next several years by about
                                        30 percent—from 171,000 to over 225,000. In October 1998, DOD again
                                        increased the number of positions expected to be competed to over
                                        237,000 and stretched out the time frame to 2005. However, that figure was
                                        recently adjusted to 229,000 by 2005. We were unable to obtain details of
                                        how the new numbers would be allocated among the services.




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                      Prior to establishing the competition goal of 229,000 positions, DOD aimed
                      for cumulative savings of about $6 billion between fiscal years 1997 and
                      2003. That goal still existed at the time we completed our review and DOD
                      has already begun to reduce future years operating budgets of components
                      in anticipation of these savings and to transfer the expected savings to
                      their research and development and procurement accounts to increase
                      funding for weapon system modernization.

                      Office of the Secretary of Defense (OSD) guidance projects that
                      components will complete competitions within 2 years and begin
                      transferring funds to higher resource priority budget objectives. According
                      to OSD officials, if the savings do not occur as quickly as planned, the
                      components will have to absorb the shortfalls in their operations and
                      maintenance accounts or shift money back from planned modernization.
                      The Army’s competitive sourcing strategic plan, for example, states that if
                      major commands do not achieve programmed savings, they will have to
                      achieve the savings through other efficiencies.

                      The savings estimates could change. A DOD official told us that, after
                      receiving more detailed information from its components, DOD reduced its
                      projected annual recurring savings as of fiscal year 2004 from $2.5 billion
                      to $2.3 billion. This savings figure was still under review when we
                      completed our fieldwork and OSD had not yet decided whether to revise its
                      savings goals or its timetables for achieving them when we completed our
                      review.


                      The projections of competition savings that DOD provided to Congress in
Initial Savings Are   fiscal year 1998 appear overstated.6 The projections did not adequately
Likely to Be Less     consider investment costs related to performing A-76 cost studies. In
Than Estimated        addition, the competitions will likely take longer to complete than
                      estimated. Both of these factors will affect how quickly DOD components
                      will begin to realize net savings from the competitions. DOD components
                      have expressed concerns about their ability to meet the savings goals. DOD
                      is working to improve these estimates for its fiscal year 2000 budget
                      request.




                      6
                       Our prior reports and testimonies have raised concerns about the services’ estimated savings rates
                      from individual competitions; however, for the purposes of this analysis, we accepted DOD’s
                      estimates.



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Investment Costs                       Much like base realignment and closure actions, competitions have
Understated                            up-front investment costs that need to be considered when estimating net
                                       savings. In competitions, these investments involve study costs, personnel
                                       separation costs, and, in the case of the Army, the costs of substituting
                                       civilians for military personnel. Once these investment costs have been
                                       offset by program savings, net savings can begin to accrue on an annual
                                       recurring basis. However, available information indicates that OSD and its
                                       components have not fully and consistently accounted for and deducted
                                       these investment costs from their savings projections. This means that DOD
                                       will not accrue the estimated initial savings as quickly as projected.
                                       However, recurring long-term net savings are potentially significant.

                                       Both OSD and its components made initial assumptions about competition
                                       study costs that are understated. While the components are registering
                                       concern about these costs, they have not yet developed comprehensive
                                       assessments of them.

                                       DOD reported to Congress in April 1998 that the services expected savings
                                       of about $5.8 billion from their competitions and investment costs of
                                       $277 million to conduct the competitions.7 Table 2 indicates the savings
                                       projected by each service and the identified costs to implement the
                                       program.

Table 2: Projected Competition
Savings and Investment Costs (fiscal   Dollars in millions
year 1997 to 2003)                                                                                                        Marine
                                                                             Army        Air Force          Navy          Corps        Total
                                                              a                                     b
                                       Investment Costs                        $48                $0        $195                $34     $277
                                       Savings                             $1,272           $1,825c       $2,533            $215      $5,845d
                                       a
                                           Primarily for centrally funded contractor support of the competitions.
                                       b
                                           Subsequent to DOD’s report, costs of $53 million were identified by the Air Force.
                                       c
                                        Includes $378 million from competitive sourcing efforts at its maintenance depots, which are not
                                       governed by OMB Circular A-76.
                                       d
                                        This report to Congress excluded projected savings from defense agencies that could amount to
                                       several hundred million dollars.

                                       Source: Oversight of Outsourced Functions, DOD report to Congress.




                                       7
                                        The House Committee on Armed Services (formerly known as the National Security Committee), in
                                       report number 105-132, cited earlier, requested that DOD report on its oversight of outsourced
                                       functions. The savings and investment costs contained in this report, which were based on the fiscal
                                       year 1999-2003 Program Objective Memorandum, did not include A-76 initiatives at DOD agencies.



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                               DOD’s  savings projections provided an inconsistent and incomplete picture
                               of A-76 competitive sourcing costs and savings for the period ending in
                               fiscal year 2003. Only the Navy deducted identified investment costs from
                               its net savings estimate. Additionally, available information indicates that
                               DOD and its components understated or later changed their initial
                               estimates of investment costs.

Resource Requirements Appear   Although the magnitude of the competition program greatly eclipses
Much Greater Than Initially    previous efforts, DOD components have not yet fully identified the
Projected and Are Not Fully    resources needed to carry out the competitions. Many components are
Identified                     now projecting that the competitions will likely take much longer and
                               hence require a greater investment of resources than they originally
                               expected and reported to Congress. Many components have noted that
                               this situation is occurring when they have significantly fewer in-house
                               personnel trained to deal with A-76 programs than they had prior to
                               downsizing.

                               Conducting the competitions may require the use of contractors in
                               addition to existing in-house staff from contracting, personnel, legal,
                               manpower, accounting, internal audit, and the function being studied. To
                               the extent existing in-house resources are limited, if resources need to be
                               shifted to meet new missions, such as performing competitions, other
                               tasks or activities may be delayed or not performed.

                               DOD   initially established a benchmark estimate for competition costs of
                               $2,000 per position. The benchmark was based on an Air Force analysis of
                               the costs it incurred in performing A-76 studies with in-house personnel.
                               However, that analysis did not include an estimate of costs for developing
                               in-house most efficient organizations, raising concerns that it may have
                               understated the magnitude of the needed resources. In DOD’s April 1998
                               report, the military services estimated different investment costs, some of
                               which were higher than the DOD benchmark. The Air Force did not identify
                               costs because it planned to use only existing in-house staff to perform the
                               work, but will now augment some studies with contractor support. The
                               Navy, however, only identified estimated contractor support costs for
                               conducting the competitions of over $2,400 per position. The Army based
                               its investment cost estimate only on contractor support costs of $1,000 for
                               each civilian position, but it did not include funding for competing military
                               positions.8 The Marine Corps estimated that its competitions would cost
                               $6,700 per position and that at least 80 percent of this would fund
                               contractor support.

                               8
                                The Army subsequently revised its cost estimate to $1,500 per civilian position studied.



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Various officials told us that the resource requirements for the studies are
much greater than both DOD’s $2,000 benchmark and their service’s own
initial estimates. For example, officials at one Army major command
estimated that they would employ about $28 million in resources for their
competitions—$4 million for centrally funded contractor support costs
and $24 million for existing in-house staff—to compete 4,000 positions in a
multifunction, multilocation study, at least $7,000 per position. One Navy
command estimated that it would incur about $15 million in
costs—$2.8 million for contractor support and $12.2 million for existing
in-house staff—to compete close to 1,930 positions at various locations, or
about $7,800 per position. A second Navy command estimated that it was
spending between $7,000 and $9,000 per position—about $2,000 for
centrally funded contractor support and between $5,000 and $7,000 for
existing in-house staff to conduct competitions. Command officials stated
that the command had not received any additional funding for the
competitions and that the command would therefore have to provide the
additional resources. The large number of competitions planned for the
future could necessitate a change in the mix of in-house and contractor
personnel required to support the planned competitions. Such changes
would affect the extent to which additional funding outlays could be
required in addition to those already associated with in-house personnel.

While none of the services has yet fully determined the staff resources
necessary to implement its competition program, some service officials
have expressed concern about their ability to provide sufficient existing
in-house staff as the number of ongoing studies increases and the potential
effect on other mission requirements of devoting available resources to
meet competition needs. Some officials have already begun to express
concern about the adequacy of their resources to initiate and complete
ongoing competitions and to deal with other ongoing mission
responsibilities. Officials at one Army command stated that they have
finite resources to accomplish their overall missions and tasks. If one
mission, such as performing competitions, is given command priority,
resources are shifted to meet that priority, and other tasks or activities
may be delayed or not performed. The large increase in the number of
competitions expected to be ongoing in fiscal years 1999 and 2000 is likely
to greatly increase resource requirements.

Without allocating sufficient resources to complete the competitions, DOD
components may be unable to initiate or complete previously announced
competitions within reasonable time frames. The pressure to complete
such a large volume of competitions at one time increases the risk of



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                            poorly developed performance work statements, which have historically
                            been cited as a problem area in the competitions. Poor performance work
                            statements require subsequent revisions, reducing the levels of savings
                            from that initially expected.

                            In July 1998, DOD issued guidance directing the components, when
                            preparing operation and maintenance budget justification material for the
                            fiscal year 2000 defense budget, to (1) report actual and projected
                            competition costs, (2) explain the methodology used to develop the costs,
                            and (3) justify deviations from the average cost of $2,000 per position. This
                            information should become available when DOD releases its fiscal
                            year 2000 budget request.

Employee Separation Costs   Except for the Navy, the services understated investment costs because
Were Not Fully Identified   they did not include separation costs for civilian and military DOD
                            employees who lose their jobs as a result of competitions won by the
                            private sector. Implementation costs may also be incurred when in-house
                            organizations win the competitions and the most efficient organizations
                            require a smaller workforce.

                            Assuming that the private sector continues to win competitions at the
                            historic rate of 50 percent as determined by the Center for Naval Analyses,
                            DOD could transfer work involving more than 100,000 positions to the
                            private sector over the next several years—if it meets its goal of competing
                            over 225,000 positions. Many of the affected civilian government workers
                            could receive some form of separation pay. The Army, for example,
                            estimated an average cost of $21,000 per person separated. This average
                            covers the costs of voluntary early retirement, voluntary separation
                            incentives, and involuntary separations through reduction-in-force
                            procedures. The Navy estimated an average of $25,000 per person and the
                            Air Force an average of $33,000, of which $25,000 would be funded by
                            headquarters and $8,000 would be funded by individual commands.

                            Even if some affected employees fill other positions through DOD’s priority
                            placement program, significant numbers of government personnel could
                            still be separated. On the basis of its average separation cost of $21,000 per
                            employee, the Army’s Program Analysis and Evaluation office
                            conservatively programmed separation costs of about $200 million for only
                            9,600 employees. The office recognized, however, that the Army would
                            likely separate more personnel. The Air Force programmed $10 million in
                            civilian separation costs for fiscal year 1999 and programs only 1 year in
                            advance. The Navy did not program any separation costs and will not have



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                          a programming estimate until January 1999 for inclusion in the fiscal
                          year 2000 budget. However, the Navy’s competitive sourcing office
                          projected civilian separation costs of $819 million for 68,250 civilian
                          positions and deducted these costs to reach the savings estimate of
                          $2.5 billion through fiscal year 2003, that was reported to Congress in 1998.

                          In July 1998, DOD issued budget guidance directing defense organizations,
                          when preparing their operation and maintenance justification materials for
                          the fiscal year 2000 defense budget, to report transition costs (such as
                          separation pay and voluntary separation incentive pay) they plan to incur
                          and to disclose the methodology and cost categories used to determine
                          those costs.

Replacing Army Military   We have previously reported that, on average, the cost of civilian
Personnel Will Increase   personnel is less than the cost of military personnel. In addition, we have
Support Costs             also reported that the conversion of positions from military to civilian
                          (either government or contractor) as part of the competitive sourcing
                          process could save money, assuming that the elimination of the military
                          positions results in corresponding reductions in the authorized end
                          strengths. Such reductions are not expected to be the case for the Army
                          where competitive sourcing eliminates requirements for military positions,
                          without corresponding reductions in authorized end strength.

                          The Army’s 1998 plan called for competing 8,414 military positions.9
                          However, while the Army plans to convert all military positions competed
                          to civilian or contractor positions, it does not expect to take equivalent
                          reductions in military end-strength. Rather, it expects to use military
                          personnel released as a result of the competitions to fill other priorities.
                          Thus, the Army’s overall costs will increase by the cost of civilian or
                          contractor personnel selected to replace these military personnel.10 At the
                          same time, the Army will have to absorb some increases in operations and
                          maintenance costs without additional funding for increased civilian
                          government or contractor costs.




                          9
                           The Army’s proposed plan for the fiscal year 2000 defense budget changed the number of military
                          positions to be competed to 6,420.
                          10
                            The costs of military positions are funded through military personnel appropriation accounts,
                          whereas funding for costs associated with government civilian or contractor personnel are funded
                          through operation and maintenance appropriation accounts.



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Studies May Take Longer   As mentioned previously, planned competitions will probably take longer
Than Planned and Will     than initially projected. In addition to increasing the study costs, this will
Likely Delay Savings      also delay net savings. Meanwhile, the services are voicing concerns about
                          their ability to meet the savings targets needed to offset operating budget
                          reductions taken in advance and in anticipation of the savings.

                          In launching the competition program, DOD and its components made
                          assumptions about the amount of time needed to complete these
                          competitions. DOD’s guidance for preparation of the fiscal year 2000
                          defense budget indicates that competitions should typically take about
                          24 months to complete. The Army and the Navy initially set more
                          optimistic goals, but many service officials later came to believe that many
                          studies would take longer than 24 months.

                          The Army’s Office of the Assistant Chief of Staff for Installation
                          Management has served as the primary lead for Headquarters, Department
                          of the Army, on issues affecting the implementation of the competitions.
                          This office set competition goals of 13 months for up to 100 positions,
                          18 months for 101 to 600 positions, and 21 months for over 600 positions.
                          However, Army officials recently expressed some concern about their
                          ability to meet this schedule. For example, the Army’s Training and
                          Doctrine Command is conducting a command-wide study of 4,001
                          positions at 12 installations. This was announced to Congress in November
                          1996, and Army headquarters projected completion within 24 months.
                          However, because the start of the study was delayed by 6 months and
                          because the competitions cover multiple functions at 12 locations, with
                          phased implementation, the command currently projects completing the
                          last installation by February 2000, or 39 months after it was announced.

                          Initially, the Navy projected completing its competitions in 12 months, but
                          it revised its assumptions when preparing its 1998 plan because some
                          competitions were taking longer. The 1998 plan estimates that
                          competitions will take between 12 and 36 months, depending on their
                          complexity and including whether they are based on competitions of
                          single or multiple functions.

                          An Air Force official responsible for program oversight told us that the Air
                          Force currently projects completing competitions within 24 to 48 months
                          and that it expects to meet these time limits.




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Components Are            Since DOD began to emphasize competitions, the goals for the competitions
Concerned About Meeting   have evolved and grown, even though some DOD components have had
Competition and Savings   difficulties in meeting recent goals for announcing competitions. Some
                          components have expressed concerns about these goals.
Goals
                          OSD officials responsible for monitoring the program consider execution
                          the biggest risk factor. DOD did not have under study all of the positions it
                          planned to study in fiscal years 1997 and 1998 because some competitions
                          that were announced were later canceled, and not all of the remainder
                          were under study. DOD’s components planned to announce competitions
                          involving 37,040 positions in fiscal year 1997, but, after cancellations and
                          delayed starts of competitions, they had at most 34,997 positions under
                          study.11 In fiscal year 1998, DOD’s components expected to announce
                          competitions involving 52,630 positions, but due to shortfalls by the Navy,
                          the Marine Corps, and the Air Force, they announced plans for competing
                          only 35,710 positions and, after cancellations and delayed starts of
                          competitions, had at most 32,229 positions under study.

                          According to a Navy official, the Navy was unable to meet its fiscal
                          year 1998 announcement goals because implementing concurrent
                          initiatives such as competitions, regionalization, and consolidation, and
                          meeting mission and mission support requirements stretched available
                          personnel and financial resources. While it did not change the total
                          number of positions it planned to compete between 1997 and 1998, the
                          Navy did change the mix of military and civilian positions and some of its
                          other planning assumptions to meet readiness needs and maintain its
                          projected level of savings. In its fiscal year 1997 plan, the Navy projected
                          competing 30,000 military positions. However, in response to growing
                          concerns about the effect of competitions on the military positions needed
                          to meet sea-shore rotation requirements and other concerns, the Navy in
                          1998 reduced the number of military positions it would compete by 20,000
                          and increased the number of civilian positions it planned to compete by
                          the same number. Such a change could mean the potential for significantly
                          less savings since military positions are recognized as relatively more
                          costly to the government.

                          Officials in the Air Force’s competitive sourcing and privatization office
                          said that the Air Force, in developing its fiscal year 2000 budget request,
                          reduced the total number of positions it planned to compete between
                          fiscal year 1998 and 2003 by 23,976 (48 percent). The Air Force did so after

                          11
                            The Army’s and the Air Force’s tracking systems are unable to provide the number of positions under
                          study, but Army officials said that revisions to that system should permit that data to be tracked in the
                          future and Air Force officials said that their competitions typically start right after announcement.



                          Page 14                                              GAO/NSIAD-99-46 DOD Competitive Sourcing
                                B-279771




                                completing an analysis and determining that some positions were not
                                viable candidates because some positions were being double counted with
                                ongoing base closure reductions and other positions were not practical to
                                package for competition. However, the officials also said that OSD only
                                agreed to a reduction of about 10,600 positions. Additionally, the Air Force
                                proposed reengineering various functions to achieve additional savings of
                                about $700 million, about $116 million more than was planned to have
                                been saved with the competitions.

                                As previously noted, Marine Corps officials have indicated that they do not
                                believe they can meet their savings goals with the number of positions
                                currently planned for competition. The officials said that the Marine Corps
                                plans to increase the number of positions to be competed from 5,000 to
                                about 6,200.

                                One difficulty the services are likely to face as they try to identify more
                                competition candidates is the continuing reduction in personnel caused by
                                other ongoing defense reform efforts, cuts mandated by the Quadrennial
                                Defense Review, or other initiatives. Reductions are also planned as a
                                result of legislative requirements. These other ongoing defense reforms
                                could limit the number of positions ultimately available for competition
                                under the competitive sourcing program.

Concerns About the Effects of   Various service officials pointed to extensive reductions in base operating
Failing to Meet Study and       support budgets in recent years and expressed concern about the
Savings Goals                   additional reductions that are expected in addition to cuts associated with
                                competitions.12 They expressed concern about their ability to absorb
                                further reductions “out of hide” should they miss their competition savings
                                goals.

                                Recently, officials in all of the services have voiced concerns about their
                                ability to meet the savings goals established by OSD and the resulting
                                effects, especially considering that the savings have already been taken
                                out of future years’ operating budget estimates. For example, an Air Force
                                official told us that the Air Force’s major commands will fall short of A-76
                                savings by about $141 million in fiscal years 1998 and 1999 and that they
                                will have to absorb these shortfalls. Another Air Force official said that


                                12
                                 We previously reported that during fiscal years 1987-1996, total operation and maintenance budget
                                authority declined by 25 percent in real terms, reflecting the overall decline in defense spending.
                                However, annual operation and maintenance obligations for facilities maintenance and repair,
                                excluding family housing, declined by 38 percent on average in real terms during the period. The Army
                                had the steepest decline of all, about 48 percent. See Defense Infrastructure: Demolition of Unneeded
                                Buildings Can Help Avoid Operating Costs (GAO/NSIAD-97-125, May 13, 1997).



                                Page 15                                            GAO/NSIAD-99-46 DOD Competitive Sourcing
B-279771




most major commands are concerned about the effects of funding A-76
competitions and of personnel separation costs on their installations.

Army officials, based on work by the Army Audit Agency, have expressed
concern that delayed competition starts could reduce the Army’s proposed
fiscal year 2000 budgeted gross savings of $1.6 billion for fiscal years 1999
to 2003 by nearly $219 million—assuming the competitions are completed
within the time frames initially projected, something which the officials
consider unlikely. Another Army official indicated that even if the Army
can complete all of its targeted competitions by 2003, it may take another
1 to 2 years to implement the results, reduce the workforce, and begin
achieving the targeted savings. Additionally, the Army Audit Agency
recently stated that the Army’s installations and major commands estimate
that it will take about 50 percent longer than the time established by the
Assistant Chief of Staff for Installation Management to complete the
competitions and achieve the expected savings.13

Further, an official at the Army’s Training and Doctrine Command stated
that the command would not meet its $62-million savings goal in fiscal
year 1999 and most of fiscal year 2000. The official stated that the
competitions are taking longer than Army headquarters officials projected
and that could result in an operations and maintenance funding shortfall.

Officials at the Naval Sea Systems Command stated that they do not
believe A-76 competitions alone will be enough for the command to meet
its savings goals because there are not enough positions to compete. While
the command has a goal to compete 16,415 civilian positions, it had only
7,179 positions categorized as suitable for competition as of October 1998,
after its commercial activities inventory review. Since the commercial
activities inventory review was still ongoing when we completed our
review, we were not able to obtain information on its overall results.

In addition, the Navy’s acquisition executive stated in April 1998 that while
the Navy would do everything possible to absorb the savings goals, he did
not see any way to do this. He established a Process Action Team to
review the competitive sourcing program because he believed that the
savings were considerably overstated and would result in even more
instability in the procurement account.




13
 Observations and Lessons Learned on A-76 Cost Competition Studies, U.S. Army Audit Agency
(AA 98-340 Sept. 22, 1998).



Page 16                                          GAO/NSIAD-99-46 DOD Competitive Sourcing
                       B-279771




                       Although Marine Corps officials told us that they expected to increase the
                       number of positions to be competed, they also said, at another point, that
                       they could not meet their savings target through A-76 competitions alone.
                       They said they would attempt to make up the shortfall through alternative
                       reform initiatives such as consolidation, regionalization of existing
                       functions, and greater use of technology.


                       DOD  has provided the needed high-level emphasis, momentum, and
Most Defense           sponsorship to energize its competition program and has identified what
Components Lack        some have referred to as “stretch goals” in characterizing the larger
Detailed               number of positions to be competed. However, comprehensive planning
                       among the services to identify specific functions and locations for
Implementation Plans   competition has been limited. Detailed planning to implement the program
                       has been largely delegated to components and field activities. These
                       activities are responsible for determining the specific functions that are
                       suitable candidates for competition and whether there are sufficient
                       positions to meet overall competition goals. Such planning is needed to
                       better identify long-term resource needs, especially considering the
                       volume of studies likely to be under way in the future.

                       To date, the Air Force appears to have performed the most detailed
                       multiyear implementation analysis of its ability to attain its competition
                       goals. The Army, the Navy, and the Marine Corps have not performed a
                       multiyear implementation analysis by function and location, and the Navy
                       and the Marine Corps were unable to provide us with plans of the numbers
                       of positions for competition and projected savings for each major
                       command through fiscal year 2003. The Navy and the Marine Corps are
                       currently developing multiyear competitive sourcing implementation
                       analysis by function and location. The Navy analysis for fiscal years 1999
                       to 2001 is scheduled to be completed by June 1999 and the Marine Corps
                       plan for fiscal years 2000 to 2002 is expected to be completed by
                       April 1999. According to service officials, some or all of the major
                       commands were given numbers of positions to compete and savings goals,
                       and it is up to them to determine how best to meet the goals.

                       The Navy started developing a strategic plan for competitions in
                       September 1997, about 2 years after the Chief of Naval Operations
                       revitalized the Navy’s competition program. In response to a prior GAO
                       recommendation, the Navy expects to develop a detailed 5-year plan as
                       part of its overall strategy and expects the major commands to develop an
                       execution plan. The Navy expects to have a reasonable and achievable



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              B-279771




              strategic plan for competitions by early fiscal year 1999. The extent to
              which this strategic plan will be based on a detailed implementation
              analysis is unknown at this time.

              The Army published a competition strategy in September 1998 but has not
              conducted a detailed implementation analysis of the program to assess its
              executability. The strategy lays out a number of high-level goals and
              identifies ways to meet them. In implementing its strategy, the Army is
              placing primary responsibility for selecting and prioritizing functions and
              conducting competitions on the installation commanders. Army officials
              told us that each year, the major commands develop a plan that identifies
              the functions the commands will study at their installations that fiscal
              year. If the major commands do not achieve the programmed savings from
              competitions, they must achieve the savings through other efficiencies or
              local personnel management actions. The Army has also established a
              competitive sourcing and privatization Integrated Process Team and made
              it responsible for recommending a new management structure to oversee
              the program and changes to streamline processes. Team officials
              recommended that the Army develop competition plans for the fiscal
              year 2001 to 2005 time frame by April 1999. The recommendations were
              made on November 19, 1998, and are currently awaiting approval from the
              Army Vice Chief of Staff. The extent to which the competition plans will
              be based on a detailed implementation analysis is unknown at this time.

              OSD, on December 9, 1998, directed each component to develop multiyear
              competition plans consistent with and presented at the same time as their
              fiscal year 2001 to 2005 Program Objective Memorandum. OSD directed
              that these plans should include, by fiscal year, the functions and numbers
              of positions to be competed.


              DOD has established an ambitious competition program as a means of
Conclusions   reducing its infrastructure support costs and increasing funding available
              for modernization and procurement. Establishing realistic competition and
              savings goals are key to achieving the program’s desired results. However,
              DOD’s savings projections have not adequately accounted for the costs of
              conducting the competitions. These costs could significantly reduce DOD’s
              expected level of savings in the short term. In addition, the planned
              competitions are likely to take longer than initially projected, further
              reducing the annual savings that will be realized. Consequently, the
              estimated savings between fiscal year 1997 and 2003 are overstated. The
              effects of failing to realize these annual savings could be significant, since



              Page 18                                GAO/NSIAD-99-46 DOD Competitive Sourcing
                     B-279771




                     DOD has already reduced future operating budget estimates to take into
                     account the estimated savings.

                     Also, the number of competitions DOD expects to complete over the next
                     several years continues to increase, even as difficulties in meeting
                     previous goals grow. Service officials are increasingly expressing concern
                     about their ability to meet these targets, especially considering the
                     unprecedented number of competitions that are planned to be ongoing
                     simultaneously in the near future. Finally, we believe there is merit to this
                     concern because most components lack detailed plans and analyses to
                     help determine whether the numbers of positions to be competed would
                     be practical.


                     We recommend that the Secretary of Defense require the DOD components
Recommendations      to assess to what extent available resources are sufficient to execute the
                     numbers of planned competitions within the time frames envisioned and
                     make such adjustments as needed to ensure adequate program execution.
                     In doing so, we also recommend that the Secretary require the
                     components to reexamine and adjust as necessary the competitive
                     sourcing study targets, milestones, expected net short-term savings, and
                     the planned operating budget reductions.


                     In commenting on a draft of this report, DOD concurred with our
Agency Comments      conclusions and recommendations (see appendix III). However, the
and Our Evaluation   response also indicated that DOD does not believe that its components have
                     completed enough studies since fiscal year 1997 to establish a baseline
                     that would necessitate the reevaluation of competitive sourcing milestones
                     and objectives at this time, as our report recommends. DOD noted that the
                     Deputy Secretary of Defense had proposed a number of initiatives in a
                     December 9, 1998, memorandum to the Defense components that will
                     make better use of existing resources devoted to competitive sourcing
                     studies. However, DOD did not indicate at what point it would establish a
                     new baseline.

                     We continue to believe that DOD has sufficient reason to reassess the
                     competitive sourcing study targets, milestones, expected short-term
                     savings and planned operating budget reductions now. The issues at hand
                     involve more than the number of competitions completed, they also
                     involve to what extent the planned announcements of competitions have
                     occurred and whether there are sufficient resources to complete them.



                     Page 19                                GAO/NSIAD-99-46 DOD Competitive Sourcing
B-279771




This is of concern especially given the large number of studies planned for
announcement in fiscal years 1998 and 1999 and the delays encountered in
getting the fiscal year 1998 studies underway. If similar delays are
encountered in fiscal year 1999, they could seriously affect future program
execution and DOD’s ability to achieve results in a timely manner.
Accordingly, an important part of any reassessment should also include
examining the components’ progress in developing detailed
implementation plans; such plans will have a direct bearing on resource
requirements.

DOD also provided technical comments to the draft, which we have
incorporated as appropriate.


We are sending copies of this report to the Chairmen of the Senate
Committees on Armed Services and on Appropriations and of the House
Committees on Armed Services and on Appropriations; the Secretaries of
Defense, the Army, the Air Force, and the Navy; the Commandant of the
Marine Corps; and the Director, Office of Management and Budget.

Please contact me at (202) 512-8412 if you or your staff have any questions
concerning this report. Major contributors to this report are in
appendix IV.

Sincerely yours,




David R. Warren, Director
Defense Management Issues




Page 20                               GAO/NSIAD-99-46 DOD Competitive Sourcing
Page 21   GAO/NSIAD-99-46 DOD Competitive Sourcing
Contents



Letter                                                                                            1


Appendix I                                                                                       24
Scope and
Methodology
Appendix II                                                                                      26
The A-76 Process
Appendix III                                                                                     30
Comments From the
Department of
Defense
Appendix IV                                                                                      31
Major Contributors to
This Report
Related GAO Products                                                                             35


Tables                  Table 1: Positions Planned for A-76 Competition Announcement              5
                        Table 2: Projected Competition Savings and Investment Costs               8


Figures                 Figure 1: Positions Potentially Under A-76 Competition Between            6
                          Fiscal Year 1997 and 2003
                        Figure II.1: Overview of the A-76 Process                                27




                        Abbreviations

                        CAMIS     Commercial Activities Management Information System
                        DOD       Department of Defense
                        FYDP      Future Years Defense Plan
                        IFB       Invitation for Bid
                        MEO       most efficient organization
                        OMB       Office of Management and Budget
                        OSD       Office of the Secretary of Defense


                        Page 22                             GAO/NSIAD-99-46 DOD Competitive Sourcing
Page 23   GAO/NSIAD-99-46 DOD Competitive Sourcing
Appendix I

Scope and Methodology


             For this report, we (1) identified the Department of Defense’s (DOD)
             competitive sourcing study and savings goals, (2) assessed the accuracy of
             the savings estimates provided to Congress, and (3) evaluated the
             adequacy of program planning to support the overall program.

             To determine the Office of the Secretary of Defense’s (OSD) process for
             managing the A-76 savings targets, we met with representatives of the
             Defense Management Council, including OSD’s Office of Program Analysis
             and Evaluation and the A-76 Task Force in the Office of the Deputy Under
             Secretary of Defense for Industrial Affairs and Installations.

             To identify DOD’s competitive sourcing study and savings goals and assess
             how well investment costs are reflected in the savings estimates, we
             obtained and analyzed the planning assumptions each military service and
             OSD used. We did not use the budget justification material on competitive
             sourcing contained in the 1999 to 2003 Future Years Defense Plan (FYDP)
             because of certain limitations in the data. Instead, we obtained
             comprehensive information from each service on the numbers of positions
             planned for study that served as the basis for projected savings between
             1997 and 2003, which included studies in one service that began as early as
             1993. Therefore, while the 1999 FYDP material lists studies of
             approximately 214,000 positions, our discussions with DOD components
             identified over 225,000 positions either already competed, under study, or
             planned for competition. We also obtained information on unrecognized
             costs, such as separation costs, from the Air Force’s and the Navy’s
             comptroller’s offices, as well as the Army’s Office of Program Analysis and
             Evaluation. We did not determine the reliability of the cost information
             provided by these offices. We met with officials from the Center for Naval
             Analyses to discuss their work on competitive sourcing within DOD, and
             obtained copies of their reports. We also spoke with responsible OSD,
             service, and installation officials, including manpower, contracting, and
             financial management officials to obtain information on the personnel
             resources required to conduct the studies and their ongoing efforts to
             reform their commercial activities databases.

             To determine the extent to which uncertainties exist about meeting study
             goals and savings targets in the projected time frames, we met with
             responsible officials from OSD, the Army, the Air Force, the Navy, and the
             Marine Corps and contacted officials from defense agencies and
             installations. We obtained documentation on past, ongoing, and planned
             A-76 studies.




             Page 24                               GAO/NSIAD-99-46 DOD Competitive Sourcing
Appendix I
Scope and Methodology




To evaluate the adequacy of the advance planning to support the effort
underway, we met with representatives of the Defense Management
Council and the A-76 Task Force, as well as cognizant service officials, to
discuss their oversight role and the program implementation risks. We also
researched relevant laws cited by officials.

We performed much of our work in Washington, D.C. However, we also
conducted work at the Air Force Air Education and Training Command,
San Antonio, Texas; the U.S. Army Training and Doctrine Command, Fort
Monroe, Virginia; and the Naval Air Systems Command, Patuxet River,
Maryland.

We conducted our review from September 1997 to December 1998 in
accordance with generally accepted government auditing standards.




Page 25                               GAO/NSIAD-99-46 DOD Competitive Sourcing
Appendix II

The A-76 Process


              In general, the A-76 process consists of six key activities—(1) developing a
              performance work statement and quality assurance surveillance plan;
              (2) conducting a management study to determine the government’s most
              efficient organization (MEO); (3) developing an in-house government cost
              estimate for MEO; (4) issuing a Request for Proposals or Invitation for Bid;
              (5) evaluating the proposals or bids and comparing the in-house estimate
              with a private sector offer or interservice support agreement and selecting
              the winner of the cost comparison; and (6) addressing any appeals
              submitted under the administrative appeals process, which is designed to
              ensure that all costs are fair, accurate, and calculated in the manner
              prescribed by the A-76 handbook.

              Figure II.1 shows an overview of the process. The solid lines indicate the
              process used when the government issues an Invitation for Bids,
              requesting firm bids on the cost of performing a commercial activity. This
              type of process is normally used for more routine commercial activities,
              such as grass-cutting or cafeteria operations, where the work process and
              requirements are well defined. The dotted lines indicate the additional
              steps that take place when the government wants to pursue a negotiated,
              “best value” procurement. While it may not be appropriate for use in all
              cases, this type of process is often used when the commercial activity
              involves high levels of complexity, expertise, and risk.




              Page 26                               GAO/NSIAD-99-46 DOD Competitive Sourcing
                                                      Appendix II
                                                      The A-76 Process




Figure II.1: Overview of the A-76 Process




                                                                 Prepare in-house
                                                                 cost estimate




                                    MEO                                                                                 Revise
                                                                 Prepare technical              Revise
                                    management study                                                                    in-house
                                                                 proposal                       MEO
                                                                                                                        cost estimate




   Issue performance
   work statement
   and RFP or IFB
                                                                                           Compare selected
                                                                Conduct technical          Best Value and MEO
                                                                evaluation of MEO          technical proposals



                                     Accept                     Conduct technical              Compare
                                                                                                                         Select lowest
                                     contractor                 evaluation of                  costs/select
                                                                                               contractor                cost alternative
                                     bids/proposals             bids/proposals




          Most Efficient Organization (MEO) activities

          Government technical evaluation activities

          Process for invitation for bid (IFB)

          Additional steps required for request for
          proposals (RFP)



                                                      Source: Air Force Air Education and Training Command documents.




                                                      The circular requires the government to develop a performance work
                                                      statement. This statement, which is incorporated into either the Invitation



                                                      Page 27                                        GAO/NSIAD-99-46 DOD Competitive Sourcing
Appendix II
The A-76 Process




for Bids or Request for Proposals, serves as the basis for both government
estimates and private sector offers. If the Invitation for Bids process is
used, each private sector company develops and submits a bid, giving its
firm price for performing the commercial activity. While this process is
taking place, the government activity performs a management study to
determine the most efficient and effective way of performing the activity
with in-house staff. Based on this “most efficient organization,” the
government develops a cost estimate and submits it to the selecting
authority. The selecting authority concurrently opens the government’s
estimate along with the bids of all private sector firms.

According to OMB’s A-76 guidance, the government’s in-house estimate
wins the competition unless the private sector’s offer meets a threshold of
savings that is at least 10 percent of direct personnel costs or $10 million
over the performance period. This minimum cost differential was
established by the Office of Management and Budget (OMB) to ensure that
the government would not contract out for marginal estimated savings.

If the Request for Proposals—best value process—is used, the Federal
Procurement Regulation and the A-76 supplemental handbook require
several additional steps. The private sector offerors submit proposals that
often include a technical performance proposal and a price. The
government prepares an in-house management plan and cost estimate
based strictly on the performance work statement. On the other hand,
private sector proposals can offer a higher level of performance or service.

The government’s selection authority reviews the private sector proposals
to determine which one represents the best overall value to the
government based on such considerations as (1) higher performance
levels, (2) lower proposal risk, (3) better past performance, and (4) cost to
do the work. After the completion of this analysis, the selection authority
prepares a written justification supporting its decision. This includes the
basis for selecting a contractor other than the one that offered the lowest
price to the government. Next, the authority evaluates the government’s
offer and determines whether it can achieve the same level of performance
and quality as the selected private sector proposal. If not, the government
must then make changes to meet the performance standards accepted by
the authority. This ensures that the in-house cost estimate is based upon
the same scope of work and performance levels as the best value private
sector offer. After determining that the offers are based on the same level
of performance, the cost estimates are compared. As with the Invitation
for Bids process, the work will remain in-house unless the private offer is



Page 28                                GAO/NSIAD-99-46 DOD Competitive Sourcing
Appendix II
The A-76 Process




(1) 10 percent less in direct personnel costs or (2) $10 million less over the
performance period.

Participants in the process—for either the Invitation for Bids or Request
for Proposals process—may appeal the selection authority’s decision if
they believe the costs submitted by one or more of the participants were
not fair, accurate, or calculated in the manner prescribed by the A-76
handbook.




Page 29                                GAO/NSIAD-99-46 DOD Competitive Sourcing
Appendix III

Comments From the Department of Defense




               Page 30     GAO/NSIAD-99-46 DOD Competitive Sourcing
Appendix IV

Major Contributors to This Report


                        Barry W. Holman, Associate Director
National Security and   Marilyn K. Wasleski, Assistant Director
International Affairs   David B. Best, Evaluator-in-Charge
Division, Washington,   Daniel B. Mezger, Evaluator
                        David W. Rowan, Senior Evaluator
D.C.
                        Neil H. Gottlieb, Senior Evaluator
Chicago Field Office    James E. Fuquay, Senior Evaluator
                        Cheryl K. Andrew, Senior Evaluator




                        Page 31                               GAO/NSIAD-99-46 DOD Competitive Sourcing
Appendix IV
Major Contributors to This Report




Page 32                             GAO/NSIAD-99-46 DOD Competitive Sourcing
Appendix IV
Major Contributors to This Report




Page 33                             GAO/NSIAD-99-46 DOD Competitive Sourcing
Appendix IV
Major Contributors to This Report




Page 34                             GAO/NSIAD-99-46 DOD Competitive Sourcing
Related GAO Products


              OMB Circular A-76: Oversight and Implementation Issues (GAO/T-GGD-98-146,
              June 4, 1998).

              Quadrennial Defense Review: Some Personnel Cuts and Associated
              Savings May Not Be Achieved (GAO/NSIAD-98-100, Apr. 30, 1998).

              Competitive Contracting: Information Related to the Redrafts of the
              Freedom From Government Competition Act (GAO/GGD/NSIAD-98-167R,
              Apr. 27, 1998).

              Defense Outsourcing: Impact on Navy Sea-Shore Rotations
              (GAO/NSIAD-98-107, Apr. 21, 1998).

              Defense Infrastructure: Challenges Facing DOD in Implementing Defense
              Reform Initiatives (GAO/T-NSIAD-98-115, Mar. 18, 1998).

              Defense Management: Challenges Facing DOD in Implementing Defense
              Reform Initiatives (GAO/T-NSIAD/AIMD-98-122, Mar. 13, 1998).

              Base Operations: DOD’s Use of Single Contracts for Multiple Support
              Services (GAO/NSIAD-98-82, Feb. 27, 1998).

              Defence Outsourcing: Better Data Needed to Support Overhead Rates for
              A-76 Studies (GAO/NSIAD-98-62, Feb. 27, 1998).

              Outsourcing DOD Logistics: Savings Achievable But Defense Science
              Board’s Projections Are Overstated (GAO/NSIAD-98-48, Dec. 8, 1997).

              Financial Management: Outsourcing of Finance and Accounting Functions
              (GAO/AIMD/NSIAD-98-43, Oct. 17, 1997).

              Base Operations: Contracting for Firefighters and Security Guards
              (GAO/NSIAD-97-200BR, Sept. 12, 1997).

              Terms Related to Privatization Activities and Processes (GAO/GGD-97-121,
              July 1997).

              Defense Outsourcing: Challenges Facing DOD as It Attempts to Save
              Billions in Infrastructure Costs (GAO/T-NSIAD-97-110, Mar. 12, 1997).

              Base Operations: Challenges Confronting DOD as It Renews Emphasis on
              Outsourcing (GAO/NSIAD-97-86, Mar. 11, 1997).



              Page 35                                GAO/NSIAD-99-46 DOD Competitive Sourcing
           Related GAO Products




           Public-Private Mix: Effectiveness and Performance of GSA’s In-House and
           Contracted Services (GAO/GGD-95-204, Sept. 29, 1995).

           Government Contractors: An Overview of the Federal Contracting-Out
           Program (GAO/T-GGD-95-131, Mar. 29, 1995).

           Government Contractors: Are Service Contractors Performing Inherently
           Governmental Functions (GAO/GGD-92-11, Nov. 18, 1991).

           OMB Circular A-76: Legislation Has Curbed Many Cost Studies in Military
           Services (GAO/GGD-91-100, July 30, 1991).

           OMB Circular A-76: DOD’s Reported Savings Figures Are Incomplete and
           Inaccurate (GAO/GGD-90-58, Mar. 15, 1990).




(709300)   Page 36                              GAO/NSIAD-99-46 DOD Competitive Sourcing
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