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United States General Accounting Office: 


Before the Committee on Governmental Affairs, U.S. Senate. 

For Release on Delivery: 
Expected at 9:30 a.m. EST: 
Wednesday, March 6, 2002: 

Competitive Sourcing: 

Challenges in Expanding A-76 Governmentwide: 

Statement of Barry W. Holman: 
Director, Defense Capabilities and Management: 


Mr. Chairman and Members of the Committee: 

I am pleased to be here today to participate in the committee's 
hearing on competition and accountability in the federal and service 
contract workforce with a particular focus on the use of Office of 
Management and Budget (OMB) Circular A-76. That circular established 
federal policy for the performance of recurring commercial activities. 
Issued in 1966, OMB supplemented it in 1979 with a handbook of 
procedures for conducting cost comparison studies to determine whether 
commercial activities should be performed by the government or by the 
private sector. OMB updated the handbook in 1983, 1996, and 1999. Cost 
comparisons completed under Circular A-76 are variously referred to as 
public-private competitions, outsourcing, or competitive sourcing. 

Emphasis on use of the A-76 process has varied over the years. The
Department of Defense (DOD), which began giving strong emphasis to the 
program in the mid- to late-1990s, has been the primary user of the 
process. Greater focus on the potential for expanded use of 
competitive sourcing governmentwide began with passage of the Federal 
Activities Inventory Reform (FAIR) Act legislation in 1998 requiring 
agencies to compile annual inventories of commercial activities. Then, 
in 2001, OMB began directing federal agencies to conduct public-
private competitions or convert work involving specified percentages 
of commercial positions on their FAIR Act inventories directly to the 
private sector. 

My comments today are largely based on our work in recent years tracking
DOD's progress in implementing its A-76 program with the goal of 
saving billions of dollars to apply to other priority needs (see list 
of related products at the end of this statement). In response to 
questions you have asked me to address, my testimony will highlight 
(1) DOD's progress under the A-76 program, (2) challenges faced by DOD 
that may also be faced by other government agencies as they pursue A-
76 studies, and (3) concerns that gave rise to the creation of the 
Commercial Activities Panel to study sourcing policies and procedures 
under section 832 of the National Defense Authorization Act for Fiscal 
Year 2001. Chaired by Comptroller General David M. Walker, the 
Commercial Activities Panel is required to report its findings and 
recommendations to the Congress by May 1, 2002. Given the ongoing 
nature of the panel's work, I hope you will appreciate limitations on 
my ability to discuss panel deliberations and their potential outcome. 


DOD has been at the forefront of federal agencies in using the A-76 
process in recent years. In 1995, DOD made the process a priority so 
as to reduce operating costs and free funds for other priorities. DOD 
has also augmented the A-76 program with what it terms strategic 
sourcing-—a broader array of reinvention and reengineering options 
that may not necessarily involve A-76 competitions. Over the years, 
the number of positions—-at one point 229,000—-that DOD planned to 
study and the time frames for the studies have varied. Current plans 
are to study approximately 183,000 positions between fiscal years 1997 
and 2007. Changes in the inventory of commercial activities and the 
current administration's sourcing initiatives could have the potential 
to change the number of positions studied in the future. However, we 
have not evaluated the extent to which these changes might occur. 

DOD has faced a number of challenges with its A-76 program that may 
produce valuable lessons learned for other federal agencies that use 
the A-76 process. The challenges include the following: (1) studies 
took longer than initially projected, (2) costs and resources required 
for the studies were underestimated, (3) selecting and grouping 
functions to compete can be difficult, and (4) determining and 
maintaining reliable estimates of savings were difficult. 

Federal managers, government workers, and private sector 
representatives have expressed concern about the A-76 study process. 
As required by legislation in 2001, the Commercial Activities Panel is 
studying and has held public hearings about the policies and 
procedures, including the A-76 process, that concern the transfer of 
commercial activities from government personnel to contractors. The 
panel, comprised of federal and private sector experts, is required to 
report its findings and recommendations to the Congress by May 1, 2002. 


Under A-76, commercial activities may be converted to or from 
contractor performance either by direct conversion or by cost 
comparison. Under direct conversion, specific conditions allow 
commercial activities to be moved from government or contract 
performance without a cost comparison study (for example, for 
activities involving 10 or fewer civilians).[Footnote 1] Generally, 
however, commercial functions are to be converted to or from contract 
performance by cost comparison, whereby the estimated cost of 
government performance of a commercial activity is compared to the 
cost of contractor performance in accordance with the principles and 
procedures set forth in Circular A-76 and the revised supplemental 
handbook. As part of this process, the government identifies the work 
to be performed (described in the performance work statement), 
prepares an in-house cost estimate based on its most efficient 
organization, and compares it with the winning offer from the private 

According to A-76 guidance, an activity currently performed in-house 
is converted to performance by the private sector if the private 
sector offer is either 10 percent lower than the direct personnel 
costs of the in-house cost estimate or is $10 million less (over the 
performance period) than the in-house cost estimate. OMB established 
this minimum cost differential to ensure that the government would not 
convert performance for marginal savings. 

The handbook also provides an administrative appeals process. An 
eligible appellant[Footnote 2] must submit an appeal to the agency in 
writing within 20 days of the date that all supporting documentation 
is made publicly available. Appeals are supposed to be adjudicated 
within 30 days after they are received. Private sector offerors who 
believe that the agency has not complied with applicable procedures 
have additional avenues of appeal. They may file a bid protest with 
the General Accounting Office or file an action in a court of 
competent jurisdiction.[Footnote 3] 

Circular A-76 requires agencies to maintain annual inventories of 
commercial activities performed in-house. A similar requirement was 
included in the 1998 FAIR Act, which directs agencies to develop 
annual inventories of their positions that are not inherently 
governmental.[Footnote 4] The fiscal year 2000 inventory identified 
approximately 850,000 full-time equivalent commercial-type positions, 
of which approximately 450,000 were in DOD.[Footnote 5] OMB has not 
yet released DOD's inventory for 2001. 

DOD has been the leader among federal agencies in recent years in its 
use of OMB Circular A-76, with very limited use occurring in other 
agencies. However, in 2001, OMB signaled its intention to direct 
greater use of the circular on a government-wide basis. In a March 9, 
2001, memorandum to the heads and acting heads of departments and 
agencies, the OMB Deputy Director directed agencies to take action in 
fiscal year 2002 to directly convert or complete public-private 
competitions of not less than 5 percent of the full-time equivalent 
positions listed in their FAIR Act inventories. Subsequent guidance 
expanded the requirement by 10 percent in 2003, with the ultimate goal 
of competing at least 50 percent. 

In 1999, DOD began to augment its A-76 program with what it terms 
strategic sourcing.[Footnote 6] Strategic sourcing may encompass 
consolidation, restructuring, or reengineering activities; 
privatization; joint ventures with the private sector; or the 
termination of obsolete services. Strategic sourcing can involve 
functions or activities regardless of whether they are considered 
inherently governmental, military essential, or commercial. I should 
add that these actions are recognized in the introduction to the
A-76 handbook as being part of a larger body of options, in addition to
A-76, that agencies must consider as they contemplate reinventing 
government operations. 

Strategic sourcing initially does not involve A-76 competitions 
between the public and the private sector, and the Office of the 
Secretary of Defense and service officials have stressed that 
strategic sourcing may provide smarter decisions because it determines 
whether an activity should be performed before deciding who should 
perform it. However, these officials also emphasized that strategic 
sourcing is not intended to take the place of A-76 studies and that 
positions examined under the broader umbrella of strategic sourcing 
may be subsequently considered for study under A-76. 

DOD's Ambitious Goals for Using A-76 Have Varied Over Time: 

After several years of limited use of Circular A-76, the deputy 
secretary of defense gave renewed emphasis to the A-76 program in 
August 1995 when he directed the services to make outsourcing of 
support activities a priority in an effort to reduce operating costs 
and free up funds to meet other priority needs. The effort was 
subsequently incorporated as a major initiative under the then 
secretary's Defense Reform Initiative, and the program became known as 
competitive sourcing—in recognition of the fact that either the public 
or the private sector could win competitions. A-76 goals for the 
number of positions to be studied have changed over time, and out-year 
study targets are fewer than in previous years. However, future study 
targets could be impacted by the current administration's emphasis on 
reliance on the private sector for commercial activities. 

The number of positions planned for study and the timeframes for 
accomplishing those studies have changed over time in response to 
difficulties in identifying activities to be studied. In 1997, DOD's 
plans called for about 171,000 positions to be studied by the end of 
fiscal year 2003. In February 1999, we reported that DOD had increased 
this number to 229,000 but had reduced the number of positions to be 
studied in the initial years of the program. In August 2000, DOD 
decreased the number of positions to be studied under A-76 to about 
203,000, added about 42,000 Navy positions for consideration under 
strategic sourcing, and extended the program to fiscal year 2005. Last 
year we noted that DOD had reduced the planned number to study to 
approximately 160,000 positions under an expanded time frame extending 
from 1997 to 2007. It also planned to study about 120,000 positions 
under strategic sourcing during that timeframe. 

More recently, DOD officials told us that the A-76 study goal for 
fiscal years 1997-2007 is now approximately 183,000 positions--135,000 
between fiscal years 1997-2001, and 48,000 between fiscal years 2002-
2007.[Footnote 7] It projects that it will study approximately 144,000 
positions under strategic sourcing. To what extent the A-76 study 
goals are likely to change in the future could be a function of 
changes in inventories of commercial activities and continuing 
management emphasis on competitive sourcing. 

Although DOD's fiscal year 2001 inventory of commercial activities has 
not been publicly released, we have noted some reductions between 
previous inventories as the department has gained experience in 
completing them. In reporting on our analysis of DOD's initial FAIR 
Act inventory, we cited the need for more consistency in identifying 
commercial activities.[Footnote 8] We found that the military services 
and defense agencies did not always consistently categorize similar 
activities. We have not had an opportunity to analyze more recent 
inventories to determine to what extent improved guidance may have 
helped to increase consistency in categorizing activities. At the same 
time, we also previously reported that a number of factors could 
reduce the number of additional functions studied under A-76. For 
example, we noted that factors such as geographic dispersion of 
positions and the inability to separate commercial activities from 
inherently governmental activities could limit the number of inventory 
positions studied. Likewise, the inventory already makes provision for 
reducing the number of positions eligible for competition such as 
where performance by federal employees was needed because of national 
security or operational risk concerns. 

On the other hand, The President's Management Agenda, Fiscal Year
2002, notes "Agencies are developing specific performance plans to 
meet the 2002 goal of completing public-private or direct conversion 
competition on not less than five percent of the full-time equivalent 
employees listed on the FAIR Act inventories. The performance target 
will increase by 10 percent in 2003." Additionally, DOD's Quadrennial 
Defense Review Report, September 30, 2001, states that the department 
should "Focus DOD 'owned' resources on excellence in those areas that 
contribute directly to warfighting. [Original emphasis.] Only those 
functions that must be performed by DOD should be kept by DOD. Any 
function that can be provided by the private sector is not a core 
government function. Traditionally, 'core' has been very loosely and 
imprecisely defined and too often used as a way of protecting existing 
arrangements." We have not assessed to what extent efforts in this 
area are likely to strengthen emphasis on A-76. 

Challenges Faced by DOD That May Be Applicable to Other Federal 

As we tracked DOD's progress in implementing its A-76 program since 
the mid-to late-1990s, we identified a number of challenges and 
concerns that have surrounded the program-—issues that other agencies 
may encounter as they seek to respond to the administration's emphasis 
on competitive sourcing. They include (1) the time required to 
complete the studies, (2) cost and resources to conduct and implement 
the studies, (3) selecting and grouping positions to compete, and (4) 
developing and maintaining reliable estimates of projected savings 
expected from the competitions. These need not be reasons to avoid A-
76 studies but are factors that need to be taken into consideration in 
planning for the studies. 

Studies Took Longer to Complete Than Initially Expected: 

Individual A-76 studies in DOD have taken longer than initially 
projected. In launching its A-76 program, some DOD components made 
overly optimistic assumptions about the amount of time needed to 
complete the competitions. For example, the Army initially projected 
that it would take 13 to 21 months to complete studies, depending on 
their size. The Navy initially projected completing its studies in 12 
months. The numbers were subsequently adjusted upward, and the most 
recent available data indicate that the studies take on average about 
22 months for single-function and 31 months for multifunction studies. 
Agencies need to keep these timeframes in mind when projecting 
resources required to support the studies and timeframes for when 
savings are expected to be realized—and may need to revisit these 
projections as they gain experience under the program. 

Costs and Resources to Conduct and Implement Studies Were 

Once DOD components found that the studies were taking longer than 
initially projected, they realized that a greater investment of 
resources would be needed than originally planned to conduct the 
studies. For example, the 2001 president's budget showed a wide range 
of projected study costs, from about $1,300 per position studied in 
the Army to about $3,700 in the Navy. Yet, various officials expressed 
concern that these figures underestimated the costs of performing the 
studies. While the costs they cited varied, some ranged up to several 
thousand dollars per position. One factor raising costs was the extent 
to which the services used contractors to facilitate completion of the 
studies. Given differences in experience levels between DOD and other 
agencies in conducting A-76 studies, these other agencies may need to 
devote greater resources to training or otherwise obtaining outside 
assistance in completing their studies. 

In addition to study costs, significant costs can be incurred in 
implementing the results of the competitions. Transition costs include 
the separation costs for civilian employees who lose their jobs as a 
result of competitions won by the private sector or when in-house 
organizations require a smaller civilian workforce. Such separation 
costs include the costs of voluntary early retirement, voluntary 
separation incentives, and involuntary separations through reduction-
in-force procedures. Initially, we found that DOD budget documents had 
not fully accounted for such costs in estimating savings that were 
likely to result from their A-76 studies. More recently, we found that 
the Department had improved its inclusion of study and transition 
costs in its budget documents. 

Selecting and Grouping Functions to Compete Can Be Difficult: 

Selecting and grouping functions and positions to compete can be 
difficult. Because most services faced growing difficulties in or 
resistance to finding enough study candidates to meet their A-76 study 
goals, the goals and time frames for completing studies changed over 
time; and DOD ultimately approved strategic sourcing as a way to 
complement its A-76 program and help achieve its savings goals. 

Guidelines implementing the FAIR Act permit agencies to exclude 
certain commercial activities from being deemed eligible for 
competition such as patient care in government hospitals. 
Additionally, as experienced by DOD, factors such as geographic 
dispersion of positions and the inability to separate commercial 
activities from inherently governmental activities could limit the 
number of inventory positions studied. It becomes important to 
consider such factors in determining what portions of the FAIR 
inventories are expected to be subject to competition. 

Developing and Maintaining Reliable Estimates of Savings Were 

Considerable questions have been raised concerning to what extent DOD 
has realized savings from its A-76 studies. In part, these concerns 
were exacerbated by the lack of a reliable system for capturing 
initial net savings estimates and updating them as needed and by other 
difficulties associated with the lack of precision often associated 
with savings estimates. Our work has shown that while significant 
savings are being achieved by DOD's A-76 program, it has been 
difficult to determine precisely the magnitude of those savings. 
Savings may be limited in the short-term because up-front investment 
costs associated with conducting and implementing the studies must be 
absorbed before long-term savings begin to accrue. Several of our 
reports in recent years have highlighted these issues. 

For example, we reported in March 2001 that A-76 competitions had 
reduced estimated costs of Defense activities primarily by reducing 
the number of positions needed to perform those activities under 
study.[Footnote 9] This is true regardless of whether the government's 
in-house organization or the private sector wins the competition. Both 
government and private sector officials with experience in such 
studies have stated that, in order to be successful in an A-76 
competition, they must seek to reduce the number of positions required 
to perform the function being studied. Related actions may include 
restructuring and reclassifying positions and using multiskill and 
multirole employees to complete required tasks. 

In December 2000, we reported on DOD's savings estimates from a number 
of completed A-76 studies.[Footnote 10] We noted that DOD had reported 
cost reductions of about 39 percent, yielding an estimated $290 
million savings in fiscal year 1999. We also agreed that individual A-
76 studies were producing savings but stressed difficulty in 
quantifying the savings precisely for a number of reasons: 

* Because of an initial lack of DOD guidance on calculating costs, 
baseline costs were sometimes calculated on the basis of average 
salaries and authorized personnel levels rather than on actual numbers. 

* DOD's savings estimates did not take into consideration the costs of 
conducting the studies and implementing the results, which of course 
must be offset before net savings begin to accrue. 

* There were significant limitations in the database DOD used to 
calculate savings. 

* Savings become more difficult to assess over time as workload 
requirements or missions change, affecting program costs and the 
baseline from which savings were initially calculated. 

Our August 2000 report assessed the extent to which there were cost 
savings from nine A-76 studies conducted by DOD activities.[Footnote 
11] The data showed that DOD realized savings from seven of the cases, 
but overall less than Defense components had initially projected. Each 
of the cases presented unique circumstances that limited our ability 
to precisely calculate savings. Some suggested lower savings. Others 
suggested higher savings than initially identified. In two cases, DOD 
components had included cost reductions unrelated to the A-76 studies 
as part of their projected savings. Additionally, baseline cost 
estimates used to project savings were usually calculated using an 
average cost of salary and benefits for the number of authorized 
positions, rather than the actual costs of the positions. The latter 
calculation would have been more precise. In four of the nine cases, 
actual personnel levels were less than authorized. While most baseline 
costs estimates were based largely on personnel costs, up to 15 
percent of the costs associated with the government's most efficient 
organizations' plans or the contractors' offers were not personnel 
costs. Because these types of costs were not included in the baseline, 
a comparison of the baseline with the government's most efficient 
organization or contractor costs may have resulted in understating 
cost savings. On the other hand, savings estimates did not reflect 
study and implementation costs, which reduced savings in the short 

 DOD has revised its information systems to better track the estimated 
and actual costs of activities studied but not to revise previous 
savings estimates. DOD is also emphasizing the development of 
standardized baseline cost data to determine initial savings 
estimates. In practice, however, many of the cost elements that are 
used in A-76 studies will continue to be estimated because DOD lacks a 
cost accounting system to measure actual costs. Further, reported 
savings from A-76 studies will continue to have some element of 
uncertainty and imprecision and will be difficult to track in the out-
years because workload requirements and missions change, affecting 
program costs and the baseline from which savings are calculated. 
Commercial Activities Panel Is Studying Sourcing Policies and 

Although comprising a relatively small portion of the government's 
overall service contracting activity, competitive sourcing under 
Circular A-76 has been the subject of much controversy because of 
concerns about the process raised both by the public and private 
sectors. Federal managers and others have been concerned about 
organizational turbulence that typically follows the announcement of A-
76 studies. Government workers have been concerned about the impact of 
competition on their jobs, their opportunity for input into the 
competitive process, and the lack of parity with industry offerors to 
protest A-76 decisions. Industry representatives have complained about 
the fairness of the process and the lack of a "level playing field" 
between the government and the private sector in accounting for costs. 
Concerns also have been registered about the adequacy of oversight of 
the competition winners' subsequent performance, whether won by the 
public or private sector. 

Amid these concerns over the A-76 process, the Congress enacted section
832 of the National Defense Authorization Act for Fiscal Year 2001. 
The legislation required the comptroller general to convene a panel of 
experts to study the policies and procedures governing the transfer of 
commercial activities for the federal government from government to 
contractor personnel. The panel, which Comptroller General David M. 
Walker chairs, includes senior officials from DOD, OMB, the Office of 
Personnel Management, private industry, federal labor organizations, 
and academia. The Commercial Activities Panel, as it is known, is 
required to report its findings and recommendations to the Congress by 
May 1, 2002. 

The panel had its first meeting on May 8, 2001, at which time it 
adopted a mission statement calling for improving the current 
framework and processes so that they reflect a balance among taxpayer 
interests, government needs, employee rights, and contractor concerns.
Subsequently, the panel held three public hearings. At the first 
hearing on June 11, in Washington, D.C., over 40 individuals 
representing a wide spectrum of perspectives presented their views. 
The panel subsequently held two additional hearings, on August 8 in 
Indianapolis, Indiana, and on August 15 in San Antonio, Texas. The 
hearing in San Antonio specifically addressed OMB Circular A-76, 
focusing on what works and what does not in the use of that process. 
The hearing in Indianapolis explored various alternatives to the use 
of A-76 in making sourcing decisions at the federal, and local levels. 

Since completion of the field hearings, the panel members have met in 
executive session several times, augmented between meetings by work of 
staff to help them (1) gather background information on sourcing 
trends and challenges, (2) identify sourcing principles and criteria, 
(3) consider A-76 and other sourcing processes to assess what's 
working and what's not, and (4) assess alternatives to the current 
sourcing processes. Panel deliberations continue with the goal of 
meeting the May 1 date for a report to the Congress. 

This concludes my statement. I would be pleased to answer any 
questions you or other members of the committee may have at this time. 

Contacts and Acknowledgment: 

For further contacts regarding this statement, please contact Barry W. 
Holman at (202) 512-8412 or Marilyn Wasleski at (202) 512-8436. Other 
individuals making key contributions to this statement include Debra 
McKinney, Donald Bumgardner, Jane Hunt, Nancy Lively, Stephanie May, 
and Judith Williams. 

[End of section] 

A-76 Related GAO Products: 

DOD Competitive Sourcing: A-76 Program Has Been Augmented by Broader 
Reinvention Options. [hyperlink,]. Washington, D.C.: June 28, 

DOD Competitive Sourcing: Effects of A-76 Studies on Federal 
Employees' Employment, Pay, and Benefits Vary. [hyperlink,]. Washington, D.C.: March 16, 

DOD Competitive Sourcing: Results of A-76 Studies Over the Past 5 
Years. [hyperlink,]. Washington, 
D.C.: December 7, 2000. 

DOD Competitive Sourcing: More Consistency Needed in Identifying
Commercial Activities. [hyperlink,]. Washington, D.C.: 
August 11,

DOD Competitive Sourcing: Savings Are Occurring, but Actions Are 
Needed to Improve Accuracy of Savings Estimates. [hyperlink,].
Washington, D.C.: August 8, 2000. 

DOD Competitive Sourcing: Some Progress, but Continuing Challenges 
Remain in Meeting Program Goals. [hyperlink,]. Washington, D.C.: 
August 8, 2000. 

Competitive Contracting: The Understandability of FAIR Act Inventories
Was Limited. [hyperlink,]. 
Washington, D.C.: April 14, 2000. 

DOD Competitive Sourcing: Potential Impact on Emergency Response 
Operations at Chemical Storage Facilities Is Minimal. [hyperlink,]. Washington, D.C.: March 
28, 2000. 

DOD Competitive Sourcing: Plan Needed to Mitigate Risks in Army 
Logistics Modernization Program. [hyperlink,]. Washington, D.C.:
October 4, 1999. 

DOD Competitive Sourcing: Air Force Reserve Command A-76 Competitions. 
Washington, D.C.: September 13, 1999. 

DOD Competitive Sourcing: Lessons Learned System Could Enhance A-76 
Study Process. [hyperlink,]. Washington, D.C.: July 
21, 1999. 

Defense Reform Initiative: Organization, Status, and Challenges.
[hyperlink,]. Washington, 
D.C.: April 21, 1999. 

Quadrennial Defense Review: Status of Efforts to Implement Personnel
Reductions in the Army Materiel Command. [hyperlink,]. Washington, D.C.: March 
31, 1999. 

Defense Reform Initiative: Progress, Opportunities, and Challenges.
Washington, D.C.: March 2, 1999. 

Force Structure: A-76 Not Applicable to Air Force 38th Engineering
Installation Wing Plan. [hyperlink,]. Washington, D.C.: 
February 26, 1999. 

Future Years Defense Program: How Savings From Reform Initiatives
Affect DOD's 1999-2003 Program. [hyperlink,]. Washington, D.C.:
February 25, 1999. 

DOD Competitive Sourcing: Results of Recent Competitions. [hyperlink,]. Washington, D.C.: 
February 23, 1999. 

DOD Competitive Sourcing: Questions About Goals, Pace, and Risks of
Key Reform Initiative. [hyperlink,]. Washington, D.C.: 
February 22, 1999. 

OMB Circular A-76: Oversight and Implementation Issues. [hyperlink,]. Washington, D.C.: June 
4, 1998. 

Quadrennial Defense Review: Some Personnel Cuts and Associated Savings 
May Not Be Achieved. [hyperlink,]. Washington, D.C.: April 
30, 1998. 

Competitive Contracting: Information Related to the Redrafts of the
Freedom From Government Competition Act. [hyperlink,]. Washington, D.C.: 
April 27, 1998. 

Defense Outsourcing: Impact on Navy Sea-Shore Rotations. [hyperlink,]. Washington, D.C.: April 
21, 1998. 

Defense Infrastructure: Challenges Facing DOD in Implementing Defense 
Reform Initiatives. [hyperlink,]. Washington, D.C.: 
March 18, 1998. 

Defense Management: Challenges Facing DOD in Implementing Defense 
Reform Initiatives. [hyperlink,]. Washington, D.C.:
March 13, 1998. 

Base Operations: DOD's Use of Single Contracts for Multiple Support
Services. [hyperlink,]. 
Washington, D.C.: February 27, 1998. 

Defense Outsourcing: Better Data Needed to Support Overhead Rates for
A-76 Studies. [hyperlink,]. Washington, D.C.: 
February 27, 1998. 

Outsourcing DOD Logistics: Savings Achievable But Defense Science
Board's Projections Are Overstated. [hyperlink,]. Washington, D.C.:
December 8, 1997. 

Financial Management: Outsourcing of Finance and Accounting Functions. 
Washington, D.C.: October 17, 1997. 

Base Operations: Contracting for Firefighters and Security Guards.
Washington, D.C.: September 12, 1997. 

Terms Related to Privatization Activities and Processes. [hyperlink,]. Washington, D.C.: July 

Defense Outsourcing: Challenges Facing DOD as It Attempts to Save
Billions in Infrastructure Costs. [hyperlink,]. Washington, D.C.:
March 12, 1997. 

Base Operations: Challenges Confronting DOD as It Renews Emphasis on 
Outsourcing. [hyperlink,]. 
Washington, D.C.: March 11, 1997. 

Public-Private Mix: Effectiveness and Performance of GSA's In-House 
and Contracted Services. [hyperlink,]. Washington, D.C.: 
September 29, 1995. 

Government Contractors: An Overview of the Federal Contracting-Out
Program. [hyperlink,]. 
Washington, D.C.: March 29, 1995. 

Government Contractors: Are Service Contractors Performing Inherently
Governmental Functions? [hyperlink,]. Washington, D.C.: November 
18, 1991. 

OMB Circular A-76: Legislation Has Curbed Many Cost Studies in 
Military Services. [hyperlink,]. Washington, D.C.: July 
30, 1991. 

OMB Circular A-76: DOD's Reported Savings Figures Are Incomplete and 
Inaccurate. [hyperlink,]. 
Washington, D.C.: March 15, 1990. 

[End of section] 


[1] For functions performed by DOD employees, a number of additional 
requirements, reports and certifications are addressed in chapter 146 
of title 10 U.S. Code and in recurring provisions in DOD's annual 
appropriation acts. 

[2] An eligible appellant is defined as (a) federal employees (or 
their representatives) and existing federal contractors affected by a 
tentative decision to waive a cost comparison; (b) federal employees 
(or their representatives) and contractors who have submitted formal 
bids or offers who would be affected by a tentative decision; or (c) 
agencies that have submitted formal offers to compete for the right to 
provide services through an interservice support agreement. 

[3] Federal employees do not have standing to file a protest with GAO 
and have generally been denied standing to sue in court. 

[4] Section 5 of P.L. 105-270, codified at 31 U.S.C. 501 note (1998) 
defines an inherently governmental function as a "function that is so 
intimately related to the public interest as to require performance by 
Federal Government employees." 

[5] Guidance implementing the FAIR Act permitted agencies to exempt 
many commercial activities from competitive sourcing consideration on 
the basis of legislative restrictions, national security 
considerations, and other factors. Accordingly, DOD's fiscal year 2000 
inventory of positions it considers to be potentially subject to 
competitions was reduced to approximately 260,000. 

[6] While strategic sourcing includes A-76 studies, the Department has 
commonly used the term to refer to all reinvention efforts other than 
A-76. For purposes of this testimony, our reference to strategic 
sourcing will not include A-76 studies. 

[7] We did not verify these numbers, and they may be subject to change 
by DOD. Numbers reflect positions initially announced to be studied; 
historically, actual numbers of positions studied tend to be lower. 

[8] U.S. General Accounting Office, DOD Competitive Sourcing: More 
Consistency Needed in Identifying Commercial Activities, [hyperlink,] (Washington D. C.: Aug. 
11, 2000). 

[9] U.S. General Accounting Office, DOD Competitive Sourcing: Effects 
of A-76 Studies on Federal Employees' Employment, Pay, and Benefits 
Vary, [hyperlink,] (Washington, 
D.C.: Mar. 16, 2001). 

[10] U.S. General Accounting Office, DOD Competitive Sourcing: Results 
of A-76 Studies Over the Past 5 Years, [hyperlink,] (Washington, D.C.: Dec. 7, 

[11] U.S. General Accounting Office, DOD Competitive Sourcing: Savings 
Are Occurring, but Actions Are Needed to Improve Accuracy of Savings 
Estimates, [hyperlink,] 
(Washington, D.C.: Aug. 8, 2000). 

[End of section]