Factors Influencing DOD Decisions To Convert Activities From In-House to Contractor Performance
PLRD-81-19
Published: Apr 22, 1981. Publicly Released: Apr 27, 1981.
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Highlights
GAO reviewed the Department of Defense's (DOD) implementation of Office of Management and Budget (OMB) Circular A-76 to find out how much contracting out is taking place because of: (1) personnel ceilings; (2) wage differentials between Federal blue-collar and contractor employees; and (3) other significant influences.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense and the Director of OMB should jointly conduct a complete review of the standard 4 percent factor required by Circular A-76. The review should include (1) an evaluation of the basis of the factor; (2) an assessment of its applicability to all functions, regardless of their complexity; (3) the possible development of a more accurate costing method for application where the factor is not considered appropriate, such as individual estimates of actual expected cost or a series of rates to apply to the various types of functions that are candidates for contracting out; and (4) an analysis of the feasibility and practicability of establishing controls to limit the funding of contract administration costs, except as otherwise justified in unusual circumstances, to a level consistent with the results of the overall review. The purpose of the limitation would be to discourage agencies from funding contract administration costs in excess of the amount otherwise considered appropriate for the cost comparison. |
Closed
GAO has no information on the actions taken in response to this recommendation.
|
| Office of Management and Budget | The Secretary of Defense and the Director of OMB should jointly conduct a complete review of the standard 4 percent factor required by Circular A-76. The review should include (1) an evaluation of the basis of the factor; (2) an assessment of its applicability to all functions, regardless of their complexity; (3) the possible development of a more accurate costing method for application where the factor is not considered appropriate, such as individual estimates of actual expected cost or a series of rates to apply to the various types of functions that are candidates for contracting out; and (4) an analysis of the feasibility and practicability of establishing controls to limit the funding of contract administration costs, except as otherwise justified in unusual circumstances, to a level consistent with the results of the overall review. The purpose of the limitation would be to discourage agencies from funding contract administration costs in excess of the amount otherwise considered appropriate for the cost comparison. |
Closed
GAO has no information on the actions taken in response to this recommendation.
|
| Office of Management and Budget | The Director of OMB should assess the need to modify the Circular A-76 guidelines for costing out (1) unoccupied in-house positions; and (2) inflation of personnel costs for in-house employees. |
Closed
GAO has no information on the actions taken in response to this recommendation.
|
| Department of Defense | The Secretary of Defense should direct the Secretaries of the Army, Navy, and Air Force to bring the following matters to the attention of their major commands and activities (1) statements of work should be complete and in-house cost estimates should be based on the same statements of work that are used in contract solicitations; (2) contractors' cost proposals that are determined to be unrealistically low should be adjusted upward by procuring contracting officers before the contract prices are entered on the cost comparisons; and (3) solicitations for bids or proposals should include current Service Contract Act wage rates. |
Closed
GAO has no information on the actions taken in response to this recommendation.
|
| Department of the Army | The Secretary of the Army should reevaluate the decision to contract out installation support functions at the Hawthorne Army Ammunition Plant in Nevada. The reevaluation should consider the matters discussed in this report, and include potential contract termination costs. |
Closed
GAO has no information on the actions taken in response to this recommendation.
|
| Department of Defense | The Secretary of Defense should issue more detailed policies, procedures, and regulations which will require (1) reviews to be performed; and (2) that those reviews be based on the same statements of work that are used in contract solicitations. |
Closed
GAO has no information on the actions taken in response to this recommendation.
|
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Cost effectiveness analysisDefense cost controlLabor costsMilitary personnelPrivatizationProcurement planningMilitary forcesContract administrationCivilian employeesInflation