The Defense Department shouldn't cut components' budgets based on estimated savings from outsourcing, members of Congress and the General Accounting Office warned Tuesday.
DoD saves money by outsourcing, GAO auditor Barry Holman told the House Armed Services Subcommittee on Military Readiness. But the department's tactic of basing future budgets on estimated cost savings is not a sound business practice, he said.
DoD is considering outsourcing about 229,000 positions from 1997 to 2005 using the public-private competition process outlined under Office of Management and Budget Circular A-76. The Pentagon estimates it will save $11.2 billion in operating costs from those competitions.
But lawmakers questioned the Pentagon's use of that savings estimate in budget projections. Subcommittee Chairman Rep. Herbert H. Bateman, R-Va., said relying on projected savings is a bad idea. Ranking Member Rep. Solomon P. Ortiz, D-Texas, agreed.
"I do not believe the savings being advanced are real," Ortiz said.
Rep. Norman Sisisky, D-Va., criticized the Pentagon's inability to get its financial statements audited.
"If they can't even balance their checkbooks, how can they figure out how much they're going to save on outsourcing?" Sisisky said. "[Full-time equivalent job] reductions. That's all this is about."
Holman, assistant director of GAO's National Security and International Affairs Division, also criticized the database DoD uses to track the outsourcing initiative, saying that it has no mechanism for tracking whether outsourcing actually produces the savings its proponents project. Changes in work requirements can reduce actual savings, Holman said.
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