Federal Productivity:

Potential Savings From Private Sector Cost Comparisons

GGD-87-30: Published: Dec 31, 1986. Publicly Released: Feb 4, 1987.

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In response to a congressional request, GAO developed a range of cost savings and program preservations under H.R. 3357, which would expand competition and government reliance on the private sector for products and services. GAO based its analysis on past analyses of the Office of Management and Budget (OMB) Circular A-76 policy, which requires executive branch agencies to procure products and services from the private sector if it would reduce costs.

GAO found that: (1) H.R. 3357 is a modification of OMB Circular A-76 and should result in cost savings while preserving programs if agencies implement it using appropriate contracting procedures and regulations; (2) based on one OMB estimate, the potential savings from H.R. 3357 could range from $2 to $3 billion; and (3) H.R. 3357 would not remove existing legislation restrictions and would require expanding the inventory of commercial positions. GAO believes that Congress should consider modifying H.R. 3357 to: (1) provide for executive branch review, with congressional oversight of private sector requests for reconsideration of government management decisions about activities not subject to contracting out; and (2) require agencies to specify in their budget requests anticipated and actual cost savings achieved as a result of private sector cost comparisons.

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