Increased Agency Use of Efficiency Guidelines for Commercial Activities Can Save Millions

FPCD-81-78: Published: Sep 30, 1981. Publicly Released: Sep 30, 1981.

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GAO completed a limited survey of the Office of Management and Budget (OMB) program to increase the efficiency of commercial or industrial-type activities in the Government.

GAO believes that OMB might be able to save millions of dollars by requiring wider agency usage of OMB guidelines on developing performance standards. These guidelines, originally issued to assure that contract personnel performed required Government services at the lowest possible cost, can also be used to assure that in-house personnel perform required services at the lowest possible cost by identifying unnecessary or inefficient work practices. Through its participation in the efficiency review program, the Department of Defense has reported savings of about $30 million over a 3-year period. However, the civilian agency with the largest commercial activity annual operating costs, the General Services Administration, has not followed OMB guidelines on performance standards. As a result, its costs are higher than necessary. The Office of Federal Procurement Policy issued written guidelines to help agencies properly prepare contract statements of work based on performance standards. It gives detailed instructions on how to accurately describe the Government's minimum work requirements and performance levels. GAO also believes that the OMB direction to executive branch agencies to accelerate implementation of OMB Circular A-76 is commendable and should result in more efficient Government operations. However, if agencies are to accelerate their A-76 programs, it is essential that OMB establish controls to assure that cost comparisons are completed properly and do not result in erroneous decisions to convert commercial activities to contract or in-house performance.

Recommendation for Executive Action

  1. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Director of OMB should: (1) make the Office of Federal Procurement Policy (OFPP) Pamphlet No. 4 an attachment to OMB Circular A-76; (2) require agency contracting officers to determine if the statement of work was generally prepared according to OFPP Pamphlet No. 4; and (3) emphasize to all agencies the importance of using OFPP Pamphlet No. 4 to develop performance work statements.

    Agency Affected: Executive Office of the President: Office of Management and Budget


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