The Defense Department should develop a best practices guide on the public-private competition process, the General Accounting Office recommends in a new report.
GAO identified several potential improvements to the way DoD handles competitions under Office of Management and Budget Circular A-76 in the report, "DoD Competitive Outsourcing: Lessons Learned Could Enhance A-76 Study Process" (NSIAD-99-152). Up to 230,000 employees at DoD face the possibility that their jobs will be contracted out through the A-76 process over the next several years.
"DoD components and activities are pursuing a variety of approaches on their own to improve competitive sourcing studies," GAO said. "However, DoD and its components have devoted limited efforts and resources to documenting and disseminating lessons learned and best practices from the various efforts that could be useful DoD-wide."
A key step in the A-76 process is the development of a performance work statement, which defines the government's requirements for either the in-house personnel or the contractor to follow. A well-written work statement clearly describes all the government's needs. A poorly written one can lead to costly revisions in order to add requirements that were left out of the original statement.
DoD has been struggling to find the balance between overly prescriptive performance work statements, which prevent bidders from coming up with innovative solutions, and performance-based statements that simply define the outcomes the government is seeking, rather than the processes that should used to reach those outcomes.
Each of the military services and DoD components offer guidance to their employees for writing work statements. Some officials have suggested creating a basic template for DoD units to follow when crafting the statements, but others say the wide variety of requirements from contract to contract would make it hard to develop a useful basic template. Instead, DoD units should follow general guidance for creating site-specific work statements, GAO said.
Other A-76 lessons learned GAO identified include:
- Combining multiple activities into a single A-76 competition. The Defense Logistics Agency, for example, combined logistics activities at 10 sites into a single competition. Officials have to factor in requirements of the Competition in Contracting Act, which allows "bundling" of activities only if it meets "DoD's legitimate needs, rather than administrative convenience or unsupported claims of economy," GAO noted. The Small Business Act also limits bundling.
- Encouraging small businesses to compete in the A-76 process. The Air Force, for example, has set up an office to reach out to small businesses for A-76 competitions. The Air Force helps small businesses identify teaming arrangements that would allow groups of small businesses to bid on large A-76 contracts.
- Using activity-based costing. This technique breaks down the total cost of an operation into the costs of individual activities, which can help an organization better determine its own costs before seeing if contractors can offer a better deal. DoD's poor accounting systems make activity-based costing difficult, GAO said. In addition, setting up an activity-based costing program is time-consuming. Setting one up while simultaneously conducting an A-76 competition would be difficult, GAO said.
- Shortening the bidding process. A-76 competitions can take two years to complete. To speed up the process, some DoD units are asking contractors to present proposals through oral presentations rather than voluminous written proposals.
- Requiring ISO 9000 certification. Companies certified with ISO 9000, a set of international standards for quality management, require less contract oversight than non-certified companies, some DoD officials say. But ISO 9000 certification costs from $22,000 to $32,000 and can take up to a year, GAO noted. DoD might also want to consider whether in-house teams should seek ISO 9000 certification, GAO said.
In a response to the GAO report, Randall Yim, deputy undersecretary of Defense for installations, said the Pentagon is developing a Web site that will "promote sharing of best practices and lessons learned."