We just have to get an accurate assessment of it. The Pentagon is counting on massive savings by transferring much of its base-support, maintenance and logistics work to contractors. It also is seeking billions of dollars in savings from what it calls strategic sourcing, a term that refers to eliminating, privatizing or consolidating work. The projected cost savings from outsourcing and strategic sourcing are being used to offset increased spending on weapons and readiness. GAO questions whether the savings will be realized.
Auditors cite several factors as contributing to the savings shortfall.
Various officials contacted by GAO say Defense agencies underestimated the costs for completing job competition studies carried out under Office of Management and Budget Circular A-76. Those OMB rules require that agencies conduct competitions between federal employees and contractors before transferring work to the private sector. Underestimating worker transition costs. A-76 costs must include the average transition, or separation, cost for civilian Defense employees who lose their jobs through the competition process. The costs include voluntary early retirement, voluntary separation incentives and involuntary separations through reductions in force.