Federal Workforce:

Provisions for Comparing Government and Contractor Retirement Costs Should Be Changed

GGD-88-25: Published: Dec 17, 1987. Publicly Released: Dec 17, 1987.

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In response to a congressional request, GAO reviewed the appropriateness of the 1986 Office of Management and Budget (OMB) Circular A-76 revisions that required exclusion of thrift savings plans and the Old Age, Survivors, and Disability Insurance (OASDI) portion of Social Security from estimates of government and contractor retirement system costs in cost-comparison studies.

GAO found that: (1) the revisions unduly favored contractors over agencies' in-house operations; (2) OASDI covered all contractor employees, but covered only those federal employees who were covered by the Federal Employees' Retirement System Act (FERS); (3) most federal employees had Civil Service Retirement System (CSRS) coverage, but no OASDI coverage; (4) contractors had a greater portion of their retirement costs excluded than agencies, since cost comparisons excluded OASDI costs but not CSRS costs; (5) OMB concluded that, since OASDI and thrift benefit plans did not derive from the Civil Service Retirement and Disability Fund, cost comparisons should not include them; and (6) OMB was seeking legislation to include all government and contractor retirement costs in cost comparisons.

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