In fiscal year 2004 federal spending on service contracts grew to over $189 billion governmentwide. This growth, along with cuts in the acquisition workforce and increases in high-dollar procurement actions, creates a challenging environment. In November 2003 the Services Acquisition Reform Act (SARA) was enacted to provide federal agencies with tools to optimize mission performance in this challenging environment. To implement the act, regulations and guidance must be developed, and other actions taken. GAO was asked to report on progress in implementing SARA's provisions.

Just over a year after the enactment of SARA, progress made on regulations, guidance, and other implementing actions varies. While nearly all the key provisions of SARA are being implemented, some provisions are further along than others. An Acquisition Workforce Training fund has been established. Efforts are ongoing to assess the skills and experience needed by the federal acquisition workforce, and to develop training to address those requirements. The Chief Acquisition Officers (CAO) Council, established in May 2004, has met five times. The council's executive committee meets monthly; and working groups on human capital, competitive sourcing, electronic government and small business have been established. Efforts to complete rulemaking on greater use of performance-based contracting are underway, with an interim rule issued and a final version being considered. An online acquisition center of excellence for services also has been created. Because of the complexities involved, rulemaking allowing the use of time-and-materials contracts to procure commercial services is proceeding at a more deliberate pace. Rules allowing special emergency procurement authority have been finalized, but actions allowing agencies to use "other transactions" authority are incomplete.