OMB Circular A-76: DOD's Reported Savings Figures Are Incomplete and Inaccurate
GGD-90-58
Published: Mar 15, 1990. Publicly Released: Apr 19, 1990.
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Highlights
Pursuant to a congressional request, GAO reviewed the: (1) accuracy of Department of Defense (DOD) savings data reported to the Office of Management and Budget (OMB) under OMB Circular A-76; and (2) availability of A-76 administrative cost information.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | To improve DOD oversight of its A-76 program and the reliability of A-76 program savings reported by DOD, the Secretary of Defense should make DOD components responsible for estimating the original cost of activities being studied, using standardized budgetary and actual cost information, rather than using a formula to calculate this, and use these cost figures in computing and reporting savings. |
Closed – Implemented
Enclosure 9 to DOD Instruction 4100.33, DOD guidance for implementing the A-76 program, was changed. The provision for using a formula to estimate original activity costs was removed and replaced with a requirement that DOD components be responsible for estimating the original cost, using standardized budgetary and actual cost information.
|
| Department of Defense | To improve DOD oversight of its A-76 program and the reliability of A-76 program savings reported by DOD, the Secretary of Defense should improve DOD ability to analyze cost changes that occur after cost studies are completed by requiring the DOD A-76 office to collect information on: (1) reasons for contract cost changes and related dollar amounts; (2) estimated contract administration costs (baseline costs); and (3) revised in-house organization costs (activity costs after the revised in-house organization is implemented). |
Closed – Implemented
In testimony before the Subcommittee on Legislation and National Security, House Government Operations Committee, DOD officials stated the department has begun tracking actual contract costs to compare with both projected savings and the cost of doing the work in-house.
|
| Department of Defense | To improve DOD oversight of its A-76 program and the reliability of A-76 program savings reported by DOD, the Secretary of Defense should report to OMB actual costs for revised in-house organizations, as required. |
Closed – Implemented
The system has been changed, according to a DOD official, and the necessary data are currently being gathered to report to OMB in October 1990.
|
| Department of Defense | To improve DOD oversight of its A-76 program and the reliability of A-76 program savings reported by DOD, the Secretary of Defense should change DOD reporting instructions to require reporting of the in-house organization bid for all completed cost studies. |
Closed – Implemented
According to a DOD A-76 official, data collection on revised in-house organization bids will be limited to the first year after the revised organization begins to operate the function. DOD stated it was too burdensome to require reporting beyond the first year.
|
| Department of Defense | To improve DOD oversight of its A-76 program and the reliability of A-76 program savings reported by DOD, the Secretary of Defense should direct the Secretaries of the Air Force, Army, and Navy to ensure that there are comprehensive edits on A-76 data at the point where they are initially entered into a computerized system, in order to reduce the number of errors in the DOD A-76 database. |
Closed – Implemented
A DOD A-76 official stated that DOD has modified its Enclosure 9 to DOD Instruction 4100.33 to give DOD components the responsibility for editing their A-76 data entries.
|
| Department of Defense | To improve DOD oversight of its A-76 program and the reliability of A-76 program savings reported by DOD, the Secretary of Defense should place increased emphasis on correcting data errors in the DOD A-76 database as soon as they are found by error identification programs. |
Closed – Implemented
A DOD official stated that DOD has redone the Commercial Activities Management Information System edit-check routines at the DOD level.
|
| Department of Defense | To improve DOD oversight of its A-76 program and the reliability of A-76 program savings reported by DOD, the Secretary of Defense should change the procedure for calculating total A-76 savings for a fiscal year by summing savings across studies. The portion of the computer program currently used to produce the annual estimated savings total should be deleted to avoid the possibility of errors in reported information. |
Closed – Implemented
DOD has directed components to calculate A-76 savings on a study-by-study basis, rather than using computer-generated estimates.
|
| Department of Defense | The Secretary of Defense should design and pilot-test an approach for reliably measuring A-76 program administration costs at DOD, with OMB monitoring the progress of the effort. OMB should be in a position to accurately determine the level of A-76 administrative costs and whether it would be worthwhile to require their collection governmentwide. |
Closed – Implemented
DOD is designing a system for gathering information on A-76 program administration. The design-and-test process is expected to take 2 years because the normal time for completing an A-76 cost study is 2 years.
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Administrative costsComparative analysisCost effectiveness analysisData integrityDefense cost controlDefense procurementFederal procurement policyInformation systemsProcurement regulationsReporting requirements