United States General Accounting Office

GAO Report to the Chairman, Subcommittee

on Readiness and Management Support,

Committee on Armed Services,

U.S. Senate

February 1999 DOD COMPETITIVE

SOURCING

Results of Recent

Competitions

GAO/NSIAD-99-44

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-279580 

February 23, 1999

The Honorable James M. Inhofe

Chairman, Subcommittee on Readiness

 and Management Support

Committee on Armed Services

United States Senate

Dear Mr. Chairman:

In late 1995, the Department of Defense (DOD) began encouraging the

services and defense agencies to conduct competitions between the public

and private sectors to determine who would be responsible for performing

selected functions currently being provided in-house. These competitions

were to be done in accordance with the Office of Management and

Budget’s (OMB) Circular A-76, which provides guidance for the

competitions, and were expected to yield significant savings that could be

used to fund other priority needs such as modernization. Currently, DOD

components are beginning a significant number of these public-private

competitions using the A-76 process.

As you requested, we (1) determined the number of sourcing competitions

completed between October 1995 and March 1998 and whether the

competitions had been done in accordance with applicable procedures;

(2) compared characteristics such as outcomes of recent competitions

with previous competitions in terms of winners of the competitions, time

required to complete the competitions, savings produced, and other

relevant metrics; and (3) identified the extent of any problems in

implementing the results of the competitions, and plans for government

monitoring of contracts awarded as a result of outsourcing.

Results in Brief The Air Force held the vast majority of competitions completed between

October 1995 and March 1998—41 of 53. Likewise, 85 percent of the

positions competed were in the Air Force. While the number of recently

completed competitions is small, the agency procedures and our analysis

of a sample of completed cases indicate that DOD components are

conducting these competitions in accordance with OMB Circular A-76

guidelines. Additionally, we identified only 10 appeals under the A-76

administrative appeal process, with only 1 being upheld.

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The private sector won about 60 percent of recent competitions compared

to about 50 percent prior to 1995. Also, the time to complete single and

multiple function competitions was 18 and 30 months, respectively,

compared to an average of about 51 months for all prior competitions.

Further, the competitions show significant potential for savings, largely

driven by personnel reductions. However, the data is too limited at this

point to reach any conclusions about trends, and questions exist about the

precision and consistency of savings estimates. Moreover limitations

continue to exist in DOD databases used to record savings from A-76

competitions and their usefulness for tracking changes over time. Actions

are still required to ensure that improvements are made in these databases

and savings estimates from completed competitions are tracked over time.

The relatively few implementation problems were independent of whether

the private or public sector had won the competition. For example, a

storage and warehousing contract was terminated for poor performance

after a 19-month performance period. In another case, full implementation

of a public maintenance operation was delayed 17 months due to a delay

in being able to recruit enough personnel to perform the work. Lastly,

resources expected to be devoted to monitoring contracts awarded to the

private sector varied depending on the size and complexity of the

functions being reviewed.

Background For many years, federal agencies have been encouraged to consider the

potential for significant savings by contracting with the private sector for

commercial type goods and services rather than relying on government

employees to provide them. Because competitive outsourcing can

potentially displace thousands of government employees, federal agencies,

including DOD components, traditionally approached competitive sourcing

hesitantly.1

 Thus, with a combination of institutional preference to

maintain in-house control over activities, along with restrictive legislative

provisions in effect between the late 1980s through 1994, DOD activities

placed relatively little emphasis on competitive sourcing during that time.

The limited competitions that did occur most often involved the Air Force.

However, in 1995, with congressional and administration initiatives

placing more emphasis on competitive sourcing as a means of achieving

greater economies and efficiencies in operations, DOD’s senior leadership

embraced it as a means of achieving savings and freeing up funds for other

priority needs. In August 1995, the Deputy Secretary of Defense directed

the services to make outsourcing a priority. Subsequently, DOD placed

1

Instead of the term outsourcing, DOD currently uses the term competitive sourcing.

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emphasis on competitive sourcing, recognizing that both the public and

private sectors are parties to the competitions. This new emphasis led to

plans by the services to consider studying over 200,000 positions by the

end of fiscal year 2003.

Circular A-76 Process DOD’s competitive sourcing is guided by OMB’s Circular A-76, issued in 1966.

In 1979, OMB supplemented the circular with a handbook that included

procedures for competitively determining whether commercial activities

should be performed in-house, by another federal agency through an

interservice support agreement, or by the private sector. OMB updated this

handbook in August 1983 and in March 1996. The latest revision was

intended to reduce the administrative burden of performing A-76

competitions and to make cost comparisons between private sector

proposals and government estimates more equitable. For example, in

response to industry concerns that agencies were not fully accounting for

their overhead costs, OMB imposed the requirement that government

overhead costs be calculated based on a standard rate of 12 percent of

direct labor costs and placed increased emphasis on the use of best value

criteria in competitions.2

To compare costs of in-house versus contractor performance, OMB’s

supplemental handbook requires the government to determine the most

efficient and effective way of performing an activity with in-house staff.

Based on this most efficient organization (MEO), the government prepares

an in-house cost estimate and compares it with the offer selected from the

private sector. OMB’s A-76 guidance stipulates that work will remain

in-house unless the private sector offer meets a threshold of savings that is

at least 10 percent of personnel costs or $10 million over the performance

period. The minimum cost differential was established by OMB to ensure

that the government would not contract out for marginal estimated

savings. Appendix I contains a more detailed description of the A-76

process.

DOD’s Historical Data Base

for A-76 Competitions

DOD records the results of its competitive sourcing program in the

Commercial Activities Management Information System (CAMIS). Each

service and defense agency maintains its own version of CAMIS, but each

system must contain DOD’s required minimum set of data elements for

2

We previously addressed in a separate report the potential use of best value under A-76, questions

concerning the basis for OMB’s new 12-percent overhead rate, as well as long-term challenges facing

DOD as it attempts to produce accurate and reliable cost data. See Defense Outsourcing: Better Data

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

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individual A-76 competitions, including numbers and length of individual

competitions, numbers of in-house military and civilian positions affected,

comparisons of in-house and contractor estimated costs, contract award

dates, and changes in costs for 3 years after a contract award. DOD also

requires that each service enter the original baseline cost of the function

and the estimated dollar savings from each of the competitions into CAMIS

and track actual costs and savings from the completed competitions for 

3 years. We have previously reported some concerns about the accuracy

and completeness of data contained in the CAMIS system.3

 A list of our

recent reports on competitive sourcing issues is included at the end of this

report.

DOD’s data on cost comparisons completed between fiscal year 1978 and

1994 show that estimated savings occurred—usually through a reduction

in personnel—regardless of whether the government or a private sector

company was awarded the work. These estimated savings were achieved

primarily by closely examining the work to be done and reengineering the

activities to do them with fewer personnel, whether in-house or

outsourced.4 DOD’s data showed the government won about half of the

A-76 competitions, and the private sector the other half.

Past Analysis Suggests

Caution Regarding Savings

The Army, Navy, and Air Force project they will each achieve between 

20 to 30 percent savings from competitive sourcing, based on prior

experience and/or Center for Naval Analyses study data.5

 While we believe

that competitive sourcing competitions are likely to produce savings, we

have urged caution regarding the magnitude of savings likely to be

achieved. In March 1997, we reported that prior savings estimates were

based on initial savings estimates from competitive sourcing competitions,

but that expected savings can change over time with changes in scope of

work or mandated wage changes. Further, we noted that continuing

budget and personnel reductions could make it difficult to sustain the

levels of previously projected savings. At the same time, we noted two

areas of competitive sourcing that appeared to offer the potential for

significant savings. These areas included giving greater emphasis to (1) the

use within the applicable legal standards of a single contract to cover

3

OMB Circular A-76: DOD’s Reported Savings Figures Are Incomplete and Inaccurate

(GAO/GGD-90-58, Mar. 15, 1990).

4

Base Operations: Challenges Confronting DOD as It Renews Emphasis on Outsourcing

(GAO/NSIAD-97-86, Mar. 11, 1997).

5

The Center for Naval Analyses is a federally funded research and development center sponsored by

the Department of the Navy.

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multiple requirements, rather than multiple contracts, for support services

and (2) the conversion of military support positions to civilian or

contractor positions.

Overview of Recent

Competitions

We identified 53 competitions completed between October 1995 and

March 1998, involving 5,757 positions (3,226 military and 2,531 civilian).6

Of the 53 competitions, 43 involved single functions such as grounds

maintenance, storage and warehousing, and child care centers; and 

10 involved multiple functions such as base operating support and shelf

stocking, receiving, and storage at commissaries.

A majority (77 percent) of the competitions were held by the Air Force.

Many of these competitions were initiated prior to or close to the time that

DOD began to emphasize competitive sourcing. Table 1 shows the number

of government positions competed for under recently completed

competitions along with those announced for competition during fiscal

years 1996, 1997, and 1998.

Table 1: Civilian and Military Positions

Competed in Recent Completed

Competitions and Those Announced

for Competition in Fiscal Years 1996,

1997, and 1998

Defense component

Positions competed

between October 1995

through March 1998

Positions announced in

fiscal years 1996, 1997,

and all of 1998

Army 94 27,437

Navy 154 20,893

Air Force 4,895 20,772

Marine Corpsa 0 0

Defense agencies 614 5,402

Total 5,757 74,504

aSince the Marine Corps did not have any completed competitions, it was not reviewed for this

report.

Source: Our analysis is based on Army, Navy, Air Force, Defense Logistics Agency, Defense

Commissary Agency, Defense Health Plan, and Defense Finance and Accounting Service

information.

Although most (85 percent) of the recently completed competitions

belonged to the Air Force, table 1 shows that most of the defense

components, reacting to the August 1995 guidance from the Deputy

Secretary of Defense, have mounted an aggressive program. Most

6

As noted in our scope and methodology, the 53 competitions represented those identified from the

CAMIS database as well as competitions not included in the database but which were identified in

discussions with agency officials. Appendix II provides summary statistical data for each of the 

53 competitions.

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components can be expected to complete considerably more competitions

each year for the next several years. However, unlike the most recently

completed competitions, most future competitions are expected to involve

civilian rather than military positions.

Extent to Which Appeals

or Other Concerns Were

Raised About the

Competitions

In examining the results of the 53 completed A-76 competitions, we found

that 10 appeals had been filed; half were filed by government and half by

private sector firms.7

 These appeals were based on questions regarding

compliance with the requirements of Circular A-76 and its supplemental

handbook, and/or questions regarding costs entered on the cost

comparison form. One appeal, however, did not meet this criteria and was

dismissed. Of the appeals accepted for consideration, only one resulted in

a reversal of the original award decision. The private sector competitor

stated that the government in-house estimate did not include all relevant

costs, and the agency’s reviewing authority agreed. When these costs were

included in the government’s estimate, the private sector firm’s price was

lower. In addition to the 10 appeals cited above, we identified one protest

to GAO from one of the private sector competitors.8 GAO upheld the

service’s decision to retain the activity in-house.

We also examined the files of a sample of nine completed competitions

and conducted interviews with officials associated with completing the

competitions and satisfied ourselves that the required cost comparisons

were made as required by A-76 guidelines. In eight instances, we found

that the agencies had elected to conduct public/private competitions and

cost comparisons even where the number of civilian employees involved

was less than 10, and according to A-76 guidance, direct conversions could

have been made without competition. Agency officials said that they

conducted a cost comparison on these functions, because they felt it was

fairer to the employees. At the same time, service and defense agency

7

OMB Circular A-76 provides an administrative appeal process for federal employees (or their

representatives) and contractors that have submitted bids or offers who would be affected by a

tentative cost comparison decision to convert to or from in-house, contract or performance under an

interservice support agreement. In the appeal of a tentative cost comparison decision, the designated

appeal authority must be independent of the activity under review or at least two organizational levels

above the official who certified the Government’s Management Plan and MEO.

8

Generally, we decline to review an agency’s decision whether to perform a commercial activity

in-house or through use of a contractor. However, where the A-76 process has included the issuance of

a competitive solicitation for purposes of conducting a cost comparison, GAO will review agency

decisions to determine whether the agency performed the cost comparison in the manner required by

the terms of the solicitation. Only those parties who are otherwise eligible to file a protest under

GAO’s Bid Protest Regulations may avail themselves of this option and only if they have already

exhausted the administrative appeals process. GAO will recommend corrective action only if the

record indicates that the agency did not accurately perform the cost comparison and that this failure

could have materially affected its outcome. See Madison Servs., Inc., B-277614, Nov. 3, 1997.

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officials indicated that during the period covered by our review, they

directly converted to contract 119 functions, each involving 10 or fewer

positions.

Characteristics of

Completed

Competitions and

Historical Trends

Most services and defense agencies have completed few competitions.

Accordingly, these competitions cannot be viewed as representing a trend

or necessarily indicative of future outcomes. Nevertheless, they provide

some initial data for limited comparison on a variety of metrics such as

outcomes won by the public and private sectors, time required to

complete the competitions, use of best value, and indications of savings.

Competition Winners Overall, 60 percent of the competitions were won by the private sector.

Table 2 summarizes the number of competitions and results by individual

defense activities.

Table 2: Competitions Completed and

Results By Defense Components

Between October 1995 and March 1998 Private sector winners

Defense component

Number of

competitions

completed Number Percent

Army 3 2 67

Navy 3 3 100

Air Force 41 24 59

Defense Commissary

Agency 4 3 75

Defense Finance and

Accounting Service 2 0 0

Total 53 32 60

Source: Our analysis is based on Army, Navy, Air Force, Defense Commissary Agency, and

Defense Finance and Accounting Service information.

The aggregate data shows an increase in the number of competitions won

by the private sector, compared with the historic trend of about 50 percent

for all services.9

 However, the percent won by the private sector was

closer to the Air Force’s historic average of 60 percent. At the same time,

when considering all competitions completed in the October 1995 through

March 1998 time frame, the percentage of competitions won by the private

and public sectors fluctuated over time. For example, for 26 competitions

completed in fiscal years 1996 and 1997, 77 percent were won by the

9

Our analysis also showed that the private sector won 53 percent ($390.1 million) of the value of the

winning bids.

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private sector. This contrasted with 27 competitions completed between

October 1997 and March 1998, where 56 percent were won by the private

sector.

We also analyzed the results to determine whether any differences existed

among winners depending on whether competitions involved single or

multiple functions. We found that 43 of the competitions involved single

functions, while 10 involved multiple functions. However, the outcomes

were the same for each grouping, with 60 percent being won by the private

sector.

We further analyzed the results to determine to what extent the use of a

standardized 12-percent overhead rate imposed on government cost

estimates may have affected the outcome of the competitions. As

previously noted, the private sector has historically registered concerns

about the extent to which government activities fully account for costs of

their operations in developing MEOs under the A-76 process. Also, some

concerns existed on the public side that the new overhead rate could

cause more competitions to be won by the private sector. As noted in our

February 1998 report, in reviewing development of this overhead rate, we

found that the 12-percent rate lacked an analytical basis. As a result, it

could either understate or overstate overhead costs in any

specific/particular competition.10

We found that 39 (74 percent) had used the 12-percent overhead rate. Of

those, 54 percent were won by the private sector. The remaining 14

competitions were not required to use this rate because they were either

completed prior to its implementation or were in the final stages of the

process. Of these, 10 did not use any overhead rate, and the 4 others used

overhead rates ranging from 0.1 percent to 12.4 percent.

Competition Time Frames Because there were no required time frames to perform A-76 competitions,

a provision was included in the Department of Defense Appropriations Act

for Fiscal Year 1991 (Public Law 101-511) and subsequent DOD

10In our February 1998 report, we noted limitations in DOD’s accounting systems and its inability to

fully identify the costs of operations. Efforts are underway to improve government cost data and

supporting systems. Recent legislative and management reform initiatives, such as the Chief Financial

Officers Act and the Federal Financial Accounting Standards Board Statement 4, have emphasized the

need for better information, including cost data, to support federal decision-making and measure the

results of program operations. Standard 4 requires that agencies use full costing in their managerial

accounting systems so that total operational costs and unit costs of outputs can be determined.

However, at that time we reported efforts to improve these systems in DOD are underway but may

require several years to be fully completed.

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appropriations acts, directing that single function A-76 competitions be

completed within 24 months and multi-function competitions within 

48 months. In July 1991, we reported that DOD averaged 51 months to

complete A-76 competitions during fiscal years 1987 to 1990.11 We found

that the time to complete the competitions in our review has decreased to

an average time of 18 months for single function competitions and 30

months for multiple function competitions. Table 3 indicates the average

length of time required to complete the recent A-76 competitions.

Table 3: Average Number of Months

Required to Complete Competitions

Between October 1995 and March 1998

Number of

competitions

completed

Defense activity Single Multiple

Average time for

single function

competitions

Average time for

multiple function

competitions

Army 3 0 11 0

Navy 3 0 19 0

Air Force 36 5 18 27

Defense agencies 1 5 23 33

Overall average 43 10 18a 30a

aAverage time based on summarizing study times for individual competitions within the applicable

category.

Source: Our analysis is based on Army, Navy, Air Force, Defense Commissary Agency, and

Defense Finance and Accounting Service information.

While the Army had few completed competitions, all involving single

functions, they averaged 11 months to complete. While this figure shows

that some competitions can be completed relatively quickly, it must be

viewed with caution because the number reflects a very limited number of

completed competitions. Additionally, other data suggests that many

competitions are likely to take much longer than the competitions

included in this review. For example, a recent Army Audit Agency report

noted that the Army’s installations and major commands currently

estimate that it will take about 50 percent longer than the Army’s goal of

completing competitions with up to 100 positions within 13 months and

competitions involving over 600 positions within 21 months.12

The Navy’s goal is to complete its competitions between 12 to 36 months.

Again, while our review shows that the Navy completed its competitions,

11OMB Circular A-76: Legislation Has Curbed Many Cost Studies in Military Services

(GAO/GGD-91-100, July 30, 1991).

12Observations and Lessons Learned on A-76 Cost Competition Studies (U.S. Army Audit Agency 

AA 98-340, Sept. 22, 1998).

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on average, in 19 months, only three single function competitions had been

completed—not enough competitions to draw any conclusions about how

long future competitions will take.

Air Force officials currently project completing competitions within 24 to

48 months. Our review showed that to date the Air Force has completed,

on average, its recent single function competitions in 18 months, and its

multiple function competitions in 27 months.

The Defense Finance and Accounting Service’s goal is to complete its

competitions in 12 months. Its single function competition took 23 months,

and its multiple function competition took 27 months to complete. The

Defense Commissary Agency’s goal is to complete the competitions

sooner, but they do not have a set target. Its multiple function

competitions have taken an average of 34 months.

Use of Best Value Criteria The most recent revision to OMB’s Circular A-76 supplemental handbook

heightened attention to the consideration of “best overall value to the

government” competitions. When best value criteria are considered, the

government expects to obtain a better value by comparing the private

sector’s technical proposals and making trade-offs between various factors

such as past performance and costs. The best private sector offer is then

selected. Next, the government’s in-house offer is reviewed to ensure that

it meets the same level of performance and performance quality as the

private sector offeror. If it does not, the government is required to change

its offer and cost estimate before the final comparison is made to

determine which represents the winner of the cost comparison. Sixteen of

the 53 completed competitions competed between October 1995 and

March 1998 used best value criteria.

Uncertainty About the

Magnitude of Savings From

Competitions Continues

Recently completed competitions continue to show that sourcing

competitions can produce significant savings, particularly in reducing

personnel requirements, even when these competitions are won by

in-house organizations. However, the data is too limited at this point to

reach any conclusions about trends. At the same time, the services are

inconsistent in how they calculate savings. Also, while initial savings

estimates may sometimes be understated, changes do occur in outsourcing

contracts, sometimes fairly soon after contracts are awarded, which can

reduce the magnitude of savings expected over time. As indicated in our

previous reports, we continue to express caution about the extent to

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which the level of initial savings will continue over time given changes that

occur, and the previous lack of attention in DOD to tracking savings over

time. Our current work also reinforces previous concerns expressed about

the adequacy and reliability of the CAMIS databases used by the services to

record savings from A-76 competitions, and their usefulness for tracking

changes over time.

Initial Savings Estimates From

Recent Competitions Are

Expected to Be Substantial

Data available from the services and defense agencies for their recently

completed competitions suggests that the 53 completed competitions were

projected to result in savings of $528 million over the life of the multiyear

awards and would average 42 percent; similar savings were projected

regardless of whether the competitions were won by the private sector or

in-house.

While most savings from sourcing competitions are related to reduced

personnel costs, the extent to which the work can be done with fewer

personnel is most clearly shown when in-house organizations win.13 While

some of the recent competitions won by in-house organizations resulted in

fairly small personnel reductions, a few show the potential for significant

reductions in personnel, in some instances totaling over 50 percent,

assuming, as discussed later, these planned reductions hold up over time.

Such reductions show the benefit of studying in-house operations to

identify the most efficient organizations. However, in one instance

personnel requirements increased because the function being competed

was not fully staffed at the time it was competed. See appendix II for

position reductions associated with competitions won in-house and by the

private sector.

Variations in How Savings Are

Calculated

In examining the competitions, we found that the Air Force, the Army, and

the Defense Finance and Accounting Service had tried to identify the costs

of their current operations to provide a baseline for projecting claimed

savings. The Air Force determined a baseline personnel cost—usually the

largest cost associated with performing a function—and then deducted

either the winning contract price or MEO estimate to calculate an estimated

savings figure, according to an Air Force official. The Army does not have

official guidance on determining savings. However, we found the Army

calculates the baseline cost by multiplying baseline workyears by the

average cost per workyear in the MEO estimate. Savings are then calculated

by subtracting the winning contract price or MEO estimate from the

13Where competitions are won by the private sector, government positions are eliminated as the work

is transferred to private sector employees under contract; in those situations, the number of

government positions eliminated does not represent the actual reduction in personnel required to

perform the function being outsourced.

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baseline cost. By using the average cost per workyear in the MEO estimate,

savings are determined in terms of current year dollars.

Projected Defense Finance and Accounting Service savings were

calculated using an estimate of baseline costs prior to the competitions,

while projected savings of the Defense Commissary Agency were

calculated by taking the difference between the MEO and the private sector

contractor’s offer, according to respective agency officials.

A Navy official told us there is currently no official Navy guidance on how

to determine savings. He also said that if an activity has determined a

baseline cost of operations, savings can be determined by subtracting the

winning offer from the baseline. However, if no baseline information is

available, the difference between the MEO and a winning contractor’s offer,

for example, may be used to estimate savings. For two of the three Navy

competitions we reviewed, the Center for Naval Analyses developed an

estimate of savings using baseline estimates. A savings estimate for the

third Navy competition was computed by subtracting the MEO estimate

from the contractor’s offer.

Projected Savings Are Subject

to Change Over Time

DOD’s projection of savings from A-76 competitions have historically been

derived from savings projections identified at the conclusion of

competitions. DOD and the services have not traditionally tracked cost

changes that occurred afterwards and revised projected savings. In

March 1997, we reported that historic difficulties in preparing good

performance work statements had often required revisions. We noted that

those revisions and changes in required labor rates and other factors can

require contract modifications and adjustments to costs of work to be

done. To the extent performance work statements need to be subsequently

adjusted because they do not adequately capture the scope of work to be

done, initial savings baseline estimates are overstated.

Although most of the competitions included in our review had only been

completed for about 15 months or less, we found that changes in

performance work statements had occurred in 18 of the 53 competitions.

Some changes were due to inadequate initial statements of work; many

others were due to new missions or work requirements that were not

known at the time the performance work statement was written.

Two contracts had to be recompeted because of inadequate performance

work statements. For example, a contract for grounds maintenance at

Keesler Air Force Base, Mississippi, had to be terminated because the

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performance work statement did not adequately reflect the work that had

to be done. Subsequently, it has taken a year to rewrite this statement and

resolicit the function, according to a base official. In another instance, a

performance work statement was modified after award for aircraft

maintenance according to an Altus Air Force Base, Oklahoma, official, to

increase inspections on C-141 aircraft included in the original statement of

work, as well as adding work involving support for the C-17 aircraft. The

C-17 aircraft was assigned to Altus after the cost comparison had been

completed. An Air Force official said that they do not adjust estimated

savings once performance periods begin because changes frequently occur

in performance work statements that make it difficult to determine actual

savings.

Also, since savings estimates are based on the winner successfully

performing the function for the entire award period, savings from the

competitions may diminish, for example, if contracts are terminated

before the end of this period. Of the 32 competitions that were won by the

private sector, 4 were terminated within 14 to 26 months. In one instance,

a contract for storage and warehousing services at Fort Riley, Kansas, was

terminated after 19 months due to unsatisfactory performance. This work

is now being done by a contractor as part of an Air Force regional

maintenance contract.

Data Systems Provide

Inadequate Basis for

Tracking Savings

DOD’s projections of savings from A-76 competitions have typically been

drawn from CAMIS data. Available information indicates that the savings,

once captured in CAMIS, are not modified and are being used continuously

without updating the data to reflect changes in or even termination of

contracts. DOD officials have noted that they could not determine from the

CAMIS data if savings were actually being realized from the A-76

competitions. Our work continues to show important limitations in CAMIS

data.

Our March 1990 report stated that CAMIS contained inaccurate and

incomplete data. We further stated that it did not accurately track baseline

costs or reasons for contract changes, and contained inaccurate and

incomplete data on items such as program implementation or contract

administration costs. For example, we found that although DOD required

components to report staff hours expended to perform individual

competitions, most of the data was not being reported or did not appear

reasonable. Our current work and recent work by others have shown that

the situation has not changed appreciably. In a 1996 report, the Center for

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Naval Analyses found that the data in CAMIS was incomplete and

inconsistent between the services and recommended that the data

collection process be more tightly controlled so that data is consistently

recorded.14

During our review, we found that CAMIS did not always record completed

competitions and sometimes incorrectly indicated that competitions were

completed where they had not yet begun or were still underway. We also

identified instances where savings data recorded for completed

competitions were incorrect based on other data provided by the

applicable service. For example, the system listed the annual savings from

the competition of the base operating support and aircraft maintenance at

Tyndall Air Force Base, Florida, as approximately $80 million; however,

our analysis of data provided on this competition estimated the projected

annual savings to be about $22 million. Air Force officials indicated that an

error had been made when this information was entered into CAMIS.

We also found that the Air Force’s CAMIS savings projections were not

adjusted and removed from the system when bases were closed or

realigned, thereby, artificially raising the total savings figure. Air Force

officials agreed that these savings should not be included in their system.

Our analysis indicated that the erroneous figures amount to about

14 percent of the Air Force’s total claimed position savings from A-76

competitions since 1979.

DOD officials have recognized significant limitations in CAMIS and are

currently making plans to improve the system. A recent DOD review

indicated that only about 20 percent of the Army and Air Force’s systems

contained complete cost data on competitions after they were

implemented. Further, it found these competition results were not

typically tracked for 3 years and not over the life of the contract, which is

usually 5 years. As a result, DOD officials anticipate issuing new guidance

to the services to improve the system. DOD officials indicate that they plan

to make changes to better track cost and savings information. They also

plan to obtain cost data for 5 years. This is in keeping with requirements

imposed as part of the National Defense Authorization Act for Fiscal 

Year 1998 amendments to 10 U.S.C. 2463. Further, they plan to strengthen

their oversight responsibilities. Their objective is to have all changes

implemented by the fall of 1999.

14An Examination of the DOD Commercial Activities Competition Data (Center for Naval Analyses 

CIM 472, Dec. 1996).

Page 14 GAO/NSIAD-99-44 Defense Competitive Sourcing
B-279580 

Performance

Problems Have Thus

Far Been Limited

Most of the competitions included in our study have been concluded for a

relatively short period of time—21 contracts have been in effect, on

average, 15 months or less—making it difficult to provide a meaningful

assessment of performance over any significant period of time.

Nonetheless, we identified a few situations where problems had arisen

whether competitions were won in-house or by the private sector. Plans

for government monitoring of private sector contract awards varied by

size and complexity of the functions outsourced.

Few Implementation

Problems Identified

We identified only a few performance problems on contracts awarded as

the result of competitions won by the private sector. We also found that

implementation problems can also arise when competitions are won by

in-house organizations.

In one instance involving a storage and warehousing contract at Fort

Riley, Kansas, the contract was terminated after the first full performance

period (19 months) because of poor contractor performance, according to

contract officials. In another instance, a grounds maintenance contract at

Keesler Air Force Base, Mississippi, was terminated. Officials there

attributed the cause partly to contractor performance and also partly due

to a poorly written performance work statement.

We also identified a problem in implementing an in-house MEO where the

government activity had won the competition. This involved the

conversion of an aircraft maintenance operation at Altus Air Force Base,

Oklahoma, from a mostly military operation to one to be operated by

government civilians. Full implementation of the aircraft maintenance

most efficient organization at Altus Air Force Base had to be extended 

17 months—from December 1996 to April 1998—due to a delay in being

able to recruit enough personnel for the work. During this transition, the

Air Force had to arrange for some of the maintenance work to be done by

other organizations. In addition, while this transition was going on, the Air

Force consolidated its personnel function into one location, which caused

further delays in hiring.

Monitoring Plans Depend

on Size and Complexity of

Workload

The performance criteria or standards used to monitor contractor, as well

as in-house, performance are laid out in the quality assurance surveillance

plans, which accompany the performance work statements developed for

competitive sourcing competitions. These plans also include the resources

needed to conduct performance reviews. The number of personnel

Page 15 GAO/NSIAD-99-44 Defense Competitive Sourcing
B-279580 

assigned to the monitoring of contracts won by the private sector will vary

depending upon the size and complexity of the functions being competed.

For example, a single location, single function competition at the Naval

Telecommunications Station, Stockton, California, had only two

government personnel assigned to oversee the contract. While, a multiple

location, multiple function competition involving the Defense Finance and

Accounting Service’s facilities, logistics, and administrative services had

plans for 15 government personnel to oversee its implementation at 5

different locations—3 people at each location. For selected competitions

we reviewed in detail, DOD officials told us they believed that the number

of oversight personnel had been adequate.

Conclusions Defense components appear to be conducting competitive sourcing

competitions in accordance with OMB Circular A-76 guidelines. While the

results of recently completed competitions included in our review may not

be indicative of future competitions, they do indicate that both the public

and private sector competitors each continue to win a great number of the

competitions; that recent competitions have taken less time than in the

past, but longer than the current DOD goals for competitions. These

competitions show the potential for significant savings; however, various

factors cause the initial savings projections to be imprecise. How well the

level of savings hold up over time remains to be determined, as work

requirements and costs change. Improvements are still needed in DOD’s

database to ensure that results from A-76 competitions and savings

estimates are tracked over time, with adjustments made as needed for

competitions won by the private as well as the public sector.

Recommendations We recommend that the Secretary of Defense establish specific guidance

and milestones for defense components to follow in making needed

improvements to their CAMIS databases to ensure accurate and complete

information is developed and maintained. Likewise, we recommend that

the Secretary provide defense components guidance for monitoring and

making periodic adjustments to savings estimates resulting from

competitive sourcing competitions whether won by the private or public

sectors. The guidance should specify that changes in costs of work, other

than changes in costs unrelated to the competitions such as mission

changes and/or new work, should be used to adjust estimated savings.

Page 16 GAO/NSIAD-99-44 Defense Competitive Sourcing
B-279580 

Agency Comments

and Our Evaluation

DOD concurred with the report’s findings concerning the need for

improvements to the Commercial Activities Management Information

System and the necessity to provide components guidance for adjusting

savings. It also indicated it planned to implement our recommendations as

part of overall improvements planned for its management information

system. DOD’s written comments on a draft of this report are included in

appendix III.

Scope and

Methodology

To determine the results of the A-76 competitions and related appeals, we

spoke with officials from the Office of the Secretary of Defense,

Departments of the Army, the Navy, and the Air Force; the Marine Corps;

the Defense Finance and Accounting Service; and the Defense

Commissary Agency to obtain listings of competitions completed from

October 1995 through March 1998 and the performance and oversight of

the winners. We obtained information on the 53 A-76 competitions

completed within DOD from October 1995 to March 1998.15 We also

judgmentally selected nine of these competitions to more fully assess

whether they were conducted in accordance with OMB Circular A-76

guidelines, and if DOD officials felt that contractor oversight was adequate.

We made our selection of cases to ensure we had coverage for military

services and defense agencies.

In this report, we considered a competition to be completed when an

award was made to a contractor or the final decision was made to keep

the function in-house between October 1, 1995, through March 31, 1998.

The Marine Corps did not have any completed competitions that met this

criteria. Therefore, the Marine Corps was not reviewed for this report.

Because of our concerns about the reliability of the CAMIS database, to

obtain details on each competition we contacted the contracting officials

or officials in charge for each of the completed cases. We also met with

contracting and other installation officials at four installations and the

Defense Finance and Accounting Service where the A-76 competitions

were conducted to review and discuss in detail the process followed for

the nine selected competitions. To determine if the nine competitions

were in compliance, we compared agency procedures with the protocols

outlined in the A-76 handbook. The competitions selected for detailed

review were storage and warehousing, Fort Riley, Kansas; dining facility,

Fort Sam Houston, Texas; Naval Computer and Telecommunications

15Because of the difficulties encountered with the reliability of CAMIS, we cannot be certain that our

universe of 53 competitions is complete.

Page 17 GAO/NSIAD-99-44 Defense Competitive Sourcing
B-279580 

Station, Stockton, California; aircraft maintenance, Altus Air Force Base,

Oklahoma; base operating support, Laughlin Air Force Base, Texas; base

operating support and aircraft maintenance, Tyndall Air Force Base,

Florida; regional jet engine maintenance, Laughlin Air Force Base, Texas;

base operating support, Columbus Air Force Base, Mississippi; and

facilities, logistics, and administration services, Defense Finance and

Accounting Service, Denver, Colorado; Indianapolis, Indiana; Kansas City,

Missouri; Cleveland, Ohio; and Columbus, Ohio. With the exception of the

Air Force, to determine the estimated dollar savings from each of the

competitions, we contacted the contracting officials who were responsible

for each of the A-76 competitions. The savings information for all Air

Force competitions is determined centrally at the Air Force’s Innovations

Center, Randolph Air Force Base, Texas. In addition, for two of the three

competitions completed by the Navy, we obtained the estimated dollar

savings from Center for Naval Analyses reports. We also discussed the

methodology used to determine savings with officials from the Army, the

Navy, the Air Force, the Defense Finance and Accounting Service, and the

Defense Commissary Agency. We did not independently verify the savings

estimates or the number of positions reduced.

To determine the factors that could affect the actual savings achieved

from the competitions, we analyzed the data obtained on each of the

competitions, and reviewed prior reports on outsourcing.

We performed our review from September 1997 to November 1998 in

accordance with generally accepted government auditing standards.

We are sending copies of this report to the Secretaries of Defense, the

Army, the Navy, and the Air Force; the Commandant of the Marine Corps;

the Director, Office of Management and Budget; and other interested

congressional committees. Copies will also be made available to others

upon request. Please contact me on (202) 512-8412 if you or your staff have

any questions concerning this report. Major contributors to this report are

listed in appendix IV.

Sincerely yours,

David R. Warren, Director

Defense Management Issues

Page 18 GAO/NSIAD-99-44 Defense Competitive Sourcing
Page 19 GAO/NSIAD-99-44 Defense Competitive Sourcing
Contents

Letter 1

Appendix I 

The A-76 Process

22

Appendix II 

List of OMB Circular

A-76 Competitions

Completed October

1995 Through

March 1998

26

Appendix III 

Comments From the

Department of

Defense

31

Appendix IV 

Major Contributors to

This Report

32

Related GAO Products 35

Tables Table 1: Civilian and Military Positions Competed in Recent

Completed Competitions and Those Announced for Competition

in Fiscal Years 1996, 1997, and 1998

5

Table 2: Competitions Completed and Results By Defense

Components Between October 1995 and March 1998

7

Table 3: Average Number of Months Required to Complete

Competitions Between October 1995 and March 1998

9

Figure Figure I.1: Overview of the A-76 Process 23

Page 20 GAO/NSIAD-99-44 Defense Competitive Sourcing
Contents

Abbreviations

CAMIS Commercial Activities Management Information System

DOD Department of Defense

MEO most efficient organization

OMB Office of Management and Budget

Page 21 GAO/NSIAD-99-44 Defense Competitive Sourcing
Appendix I 

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 the MEO; (4) issuing a Request for Proposals or Invitation for

Bids; (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 I.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 22 GAO/NSIAD-99-44 Defense Competitive Sourcing
Appendix I 

The A-76 Process

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

Issue performance 

work statement 

and RFP or IFB

Compare selected 

Best Value and MEO

technical proposals

Prepare in-house 

cost estimate

Revise

MEO 

Revise 

in-house 

cost estimate 

Compare 

costs/select 

contractor

Most Efficient Organization (MEO) activities

 Government technical evaluation activities

MEO

management study

Select lowest

cost alternative

Additional steps required for request for 

proposals (RFP)

Process for invitation for bid (IFB)

Prepare technical

proposal

Conduct technical 

evaluation of MEO

Conduct technical

evaluation of 

bids/proposals

Accept 

contractor

bids/proposals

Source: Air Force Air Education and Training Command documents.

Page 23 GAO/NSIAD-99-44 Defense Competitive Sourcing
Appendix I 

The A-76 Process

The circular requires the government to develop a performance work

statement. This statement, which is incorporated into either the Invitation

for Bids or Request for Proposals, serves as the basis for both government

estimates and private sector offers. If the Invitation for Bid 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 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

Page 24 GAO/NSIAD-99-44 Defense Competitive Sourcing
Appendix I 

The A-76 Process

for Bids process, the work will remain in-house unless the private offer is

(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 25 GAO/NSIAD-99-44 Defense Competitive Sourcing
Appendix II 

List of OMB Circular A-76 Competitions

Completed October 1995 Through

March 1998

Dollars in millions

Defense

component/ major

commands Location

Function

competed

Positions

competed

(Civ./mil.)a

Positions

reduced

(Civ./mil.)a Winner

Amount of

multi-year

award

Total

multi-year

savings

Fiscal year 1996

Army

Forces

Command

Fort Riley, KS Storage &

warehousing

29 civ. 29 civ. Contractor 3.0 4.3

Medical

Command

Fort Sam

Houston, TX

Dining facility 13 civ. 15 civ. Contractor 5.4 3.0

Navy

Bureau of Medicine

& Surgery

San Diego, CA Child care center 22 civ. 22 civ. Contractor 0.4 0.7

Air Force

Air Combat

Command

Davis Monthan

AFB,b AZ

Military family

housing

maintenance

1 mil. 

30 civ.

1 mil.

29 civ.

Contractor 5.1 1.7

Air Force Materiel

Command

Eglin AFB, FL Range mobile target

support

23 civ. 39 civ. Contractor 5.9 3.2

Air Education &

Training Command

Little Rock AFB,

AR

Transient aircraft

maintenance

11 civ. 11 civ. Contractor 2.2 0.26

Air Education &

Training Command

Maxwell AFB, AL Fuels management 16 mil. 

7 civ.

11 mil. In-house

MEO

2.2 2.1

Air Education &

Training Command

Goodfellow AFB,

TX

Ground maintenance Under

contract for

last 10 years

Under

contract for

last 10 years

Contractor 0.9 0.5

Air Education &

Training Command

Laughlin AFB, TX Base operating

support

177 mil.

101 civ.

177 mil

93 civ.

Contractor 29.4 29.8

Air Education &

Training Command

Keesler AFB, MS Ground 

maintenance

13 civ. 29 civ. Contractor 2.1 1.6

Air Education &

Training Command

Altus AFB, OK Aircraft

maintenance

1,401 mil.

43 civ.

692 mil.

17 civ.

In-house

MEO

165.5 99.6

Pacific Air Forces Anderson AFB,

Guam

Refuse collection 14 civ. 13 civ. Contractor 0.4 3.2

Pacific Air Forces Anderson AFB,

Guam

Military family

housing

maintenance

34 civ. 32 civ. Contractor 11.0 4.9

(continued)

Page 26 GAO/NSIAD-99-44 Defense Competitive Sourcing
Appendix II 

List of OMB Circular A-76 Competitions

Completed October 1995 Through

March 1998

Dollars in millions

Defense

component/ major

commands Location

Function

competed

Positions

competed

(Civ./mil.)a

Positions

reduced

(Civ./mil.)a Winner

Amount of

multi-year

award

Total

multi-year

savings

Marines

None

DECAc

None

DFASd

None

Fiscal year 1997

Army

None

Navy

Naval Computer &

Telecommunications

Command

Rough & Ready

Island, Stockton,

CA

Telecommunications

center

15 mil. 

29 civ.

27 civ. Contractor 7.8 4.2

Air Force

Air Combat

Command

Nellis AFB, NV Military family

housing

maintenance

29 civ. 33 civ. Contractor 8.4 1.0

Air Force Materiel

Command

Eglin AFB, FL Library services 8 civ. 8 civ. Contractor 1.4 0.1

Air Education &

Training Command

Laughlin AFB, TX Regional jet engine

maintenance

50 civ. 63 civ. Contractor 31.4 25.5

Air Education &

Training Command

Lackland AFB, TX Animal caretaking 26 civ. 24 civ. Contractor 3.8 1.7

Air Education &

Training Command

Maxwell AFB, AL General library 12 civ. 3 civ. In-house

MEO

1.9 0.1

Air Force District of

Washington

Bolling AFB, D.C. Military family

housing

maintenance

31 civ. 36 civ. Contractor 4.5 4.4

Air Force Material

Command

Tinker AFB, OK Ground

maintenance

21 civ. 10 civ. In-house

MEO

9.5 1.3

Air Combat

Command

Tyndall AFB, FL Base operating

support & aircraft

maintenance

796 mil.

238 civ.

796 mil.

221 civ.

Contractor 130.6 88.4

Air Mobility

Command

Andrews AFB, MD Administrative

support for medical

records

8 civ. 8 civ. Contractor 0.6 0.7

Marines

None

DECA

(continued)

Page 27 GAO/NSIAD-99-44 Defense Competitive Sourcing
Appendix II 

List of OMB Circular A-76 Competitions

Completed October 1995 Through

March 1998

Dollars in millions

Defense

component/ major

commands Location

Function

competed

Positions

competed

(Civ./mil.)a

Positions

reduced

(Civ./mil.)a Winner

Amount of

multi-year

award

Total

multi-year

savings

Defense

Commissary Agency

Fort Lewis, WA Shelf stocking

custodial receiving,

storage & holding

area

44 civ. 44 civ. Contractor 6.0 1.2

Defense

Commissary Agency

San Onofre

Marine Corps

Base, CA

Shelf stocking

custodial receiving,

storage & holding

area

6 civ. 2 civ. In-house

MEO

0.8 0.1

DFAS

Defense Finance

and Accounting

Service

Denver, CO

Indianapolis, IN

Kansas City, MO

Cleveland, OH

Columbus, OH

Facilities logistics

and administration

services

279 civ. 92 civ. In-house

MEO

41.5 20.5

Fiscal year 1998

Army

Materiel Command Redstone

Arsenal, AL

Missile maintenance 13 mil.

39 civ.

13 mil.

21 civ.

In-house

MEO

3.2 0.1

Navy

U.S. Pacific Fleet San Diego, CA

Three locations—

N. Island, 32nd

Street, &

Point Loma

Family service

centers

10 mil. 

78 civ.

75 civ. Contractor 15.7 10.1

Air Force

Air Education &

Training Command

Columbus AFB,

MS

Base operating

support

231 mil.

110 civ.

114 mil. In-house

MEO

37.2 21.4

Air Force Materiel

Command

Hanscom AFB,

MA

Laboratory support

services

1 mil.

14 civ.

1 mil.

6 civ.

In-house

MEO

2.6 2.4

Air Force Materiel

Command

Hanscom AFB,

MA

Audio-visual 2 mil.

18 civ.

2 mil.

9 civ.

In-house

MEO

2.5 2.2

Air Force Materiel

Command

Kirtland AFB,

NM

Precision

measurement

equipment lab

33 mil.

18 civ.

32 mil. In-house

MEO

4.5 5.3

Air Force Materiel

Command

Wright-Patterson

AFB, OH

Base operating

support

88 mil.

411 civ.

88 mil.

406 civ.

Contractor 40.4 57.6

Air Force Materiel

Command

Hanscom AFB,

MA

Vehicle O&M 30 mil.

34 civ.

26 mil. In-house

MEO

10.1 2.7

Air Force Materiel

Command

Tinker AFB, OK Communication

functions

48 mil.

22 civ.

69 mil. Contractor 8.8 6.2

Air Force Materiel

Command

Hill AFB, UT Grounds

maintenance

38 civ. 36 civ. Contractor 4.7 3.4

(continued)

Page 28 GAO/NSIAD-99-44 Defense Competitive Sourcing
Appendix II 

List of OMB Circular A-76 Competitions

Completed October 1995 Through

March 1998

Dollars in millions

Defense

component/ major

commands Location

Function

competed

Positions

competed

(Civ./mil.)a

Positions

reduced

(Civ./mil.)a Winner

Amount of

multi-year

award

Total

multi-year

savings

Air Force Materiel

Command

Los Angeles

AFB, CA

Education services 13 mil.

22 civ.

13 mil.

5 civ.

In-house

MEO

3.4 4.4

Air Force Materiel

Command

Robins AFB, 

GA

Audio-visual 39 civ. 5 civ. In-house

MEO

10.0 1.4

Air Force Materiel

Command

Robins AFB, 

GA

Military family

housing

maintenance

4 mil.

9 civ.

4 civ. In-house

MEO

2.7 0.04

Air Force Space

Command

Onizuka AFB,

CA

Utilities plant 4 mil.

21 civ.

4 mil.

5 civ.

In-house

MEO

7.5 0.5

Air Force Materiel

Command

Edwards AFB, 

CA

Base supply 223 mil.

116 civ.

211 mil.

109 civ.

Contractor 30.0 29.2

Air Force Special

Operations

Command

Hurlburt Field,

FL

Transient aircraft

maintenance

11 mil. 11 mil. Contractor 0.3 0.4

Air Force Space

Command

Patrick AFB, FL Base operating

support

communications

90 mil.

28 civ.

49 mil. In-house

MEO

13.3 6.2

Air Force Space

Command

Falcon AFB, CO Utilities plant 16 mil. 

5 civ.

8 mil. In-house

MEO

4.3 0.4

Air Force Space

Command

Vandenberg

AFB, CA

Housing

management

14 civ. 6 civ. In-house

MEO

3.1 1.3

Air Force Mobility

Command

McGuire AFB, 

NJ

Military family

housing

maintenance

19 civ. 19 civ Contractor 10.1 7.1

Air Force Space

Command

Vandenberg

AFB, CA

Civil engineering

(CE)

8 civ. 7 civ Contractor 1.0 0.3

Air Force Space

Command

Vandenberg

AFB, CA

CE: materiel

acquisition

3 mil.

8 civ.

3 mil. 

4 civ.

In-house

MEO

1.3 0.1

Air Force Mobility

Command

Grand Forks

AFB, ND

Base operating

support

13 civ. 12 civ. Contractor 2.8 1.3

Pacific Air Forces Elmendorf AFB,

AK

Power production 41 civ. 34 civ. Contractor 10.7 8.7

Marines

None

DECA

Defense

Commissary Agency

Camp Pendleton

Marine Corps

Base, CA

Shelf stocking

custodial receiving,

storage & holding

area

28 civ. 28 civ. Contractor 3.2 0.5

Defense

Commissary Agency

Kaneohe Bay

Marine Corps

Base, HI

Shelf stocking

custodial receiving,

storage & holding

area

17 civ. 17 civ. Contractor 2.1 0.5

(continued)

Page 29 GAO/NSIAD-99-44 Defense Competitive Sourcing
Appendix II 

List of OMB Circular A-76 Competitions

Completed October 1995 Through

March 1998

Dollars in millions

Defense

component/ major

commands Location

Function

competed

Positions

competed

(Civ./mil.)a

Positions

reduced

(Civ./mil.)a Winner

Amount of

multi-year

award

Total

multi-year

savings

DFAS

Defense Finance

and Accounting

Service

Ft. Lee, VA 

Kelly AFB, TX

Defense

commissary vendor

pay

240 civ. 165 civ. In-house

MEO

13.2 50.5

aCiv = civilian; mil = military. In some instances, the number of positions reduced was greater

than those competed for a variety of reasons, such as counting the reduction in temporary

employees when they had been used to fully staff a function.

bAFB = Air Force Base.

cDECA = Defense Commissary Agency.

dDFAS = Defense Finance and Accounting Service.

Page 30 GAO/NSIAD-99-44 Defense Competitive Sourcing
Appendix III 

Comments From the Department of Defense

Page 31 GAO/NSIAD-99-44 Defense Competitive Sourcing
Appendix IV 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Barry W. Holman

Marilyn K. Wasleski

David W. Rowan

Marjorie L. Pratt

David B. Best

Office of the General

Counsel

John G. Brosnan

B. Behn Miller

Chicago Field Office Cheryl K. Andrew

Neal H. Gottlieb

Page 32 GAO/NSIAD-99-44 Defense Competitive Sourcing
Appendix IV 

Major Contributors to This Report

Page 33 GAO/NSIAD-99-44 Defense Competitive Sourcing
Appendix IV 

Major Contributors to This Report

Page 34 GAO/NSIAD-99-44 Defense 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).

Defense 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-99-44 Defense 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).

(709298) Page 36 GAO/NSIAD-99-44 Defense Competitive Sourcing
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