Savings from A-76 process hard to predict, GAO says

Competitions between Defense Department organizations and private companies under Office of Management and Budget Circular A-76 are taking less time than they used to, but savings from the process are still hard to predict, the General Accounting Office concluded in a recent report.

GAO reviewed 53 public-private competitions involving nearly 6,000 DoD jobs between October 1995 and March 1998 for its report, "DoD Competitive Sourcing: Results of Recent Competitions" (NSIAD-99-44). Of these, the Air Force accounted for 77 percent of the competitions. That percentage could change in the coming years, however, because most defense agencies plan to significantly increase their A-76 competitions, GAO said.

For fiscal 1998, 1999 and 2000 respectively, 32,600, 52,000, and 53,400 positions are subject to A-76 competition, according to Secretary of Defense William Cohen's 1999 annual report to the President and Congress.

GAO's review uncovered a rise in private sector performance in recent competitions. Private firms won 60 percent of the reviewed competitions, while historically the winners have been split evenly between public and private organizations. GAO also found there were very few appeals of recent A-76 decisions.

The increase in private winners shouldn't be interpreted as a trend, GAO warned, because the percentage of competitions won by the private sector fluctuated during the time period reviewed.

A more solid trend was a decrease in the amount of time it took to complete both single- and multiple-function competitions. Single-function competitions took about 18 months to complete, while multiple-function competitions were finished in an average of 30 months. In 1991 the average A-76 competition took 51 months to complete.

DoD would like to shave even more time off the competitions. The Defense Finance and Accounting Service, for example, has a goal to end competitions in 12 months, but a DFAS single-function competition reviewed by GAO took closer to two years to finish.

Savings associated with A-76 competitions in the years reviewed came mostly from personnel reductions. Defense agencies, on average, projected between 20 percent and 30 percent savings from competitive sourcing. These projections should be taken with a grain of salt, GAO said, because the magnitude of savings over time is not easily predicted.

One problem lies in the way A-76 data is recorded and tracked. The computer programs each DoD agency uses to record A-76 results are rarely changed to reflect terminated contracts or updated information.

"Establishing realistic competition and savings goals are key to achieving the [A-76] program's desired results," concluded GAO in a related study, "DoD Competitive Sourcing: Questions about Goals, Pace, and Risks of Key Reform Initiative" (NSIAD-99-46). DoD estimates that it will save $6 billion from competitive sourcing between fiscal 1997 and fiscal 2003.