DOD Competitive Sourcing:

Questions About Goals, Pace, and Risks of Key Reform Initiative

NSIAD-99-46: Published: Feb 22, 1999. Publicly Released: Feb 22, 1999.

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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) use Office of Management and Budget Circular A-76 as a means of realizing an estimated $6 billion savings in support costs between fiscal years (FY) 1997 and 2003, focusing on: (1) identifying the competition and savings goals; (2) assessing the accuracy of the savings estimates provided to Congress; and (3) evaluating the adequacy of planning to support the overall program.

GAO noted that: (1) DOD has underway an unprecedented program to use competitions to gain economies and efficiencies in its operations and to reduce support costs; (2) while the numbers have evolved over time, as of now, DOD is planning to open over 229,000 government positions to competition within the public and private sectors over the next several years; (3) it estimates $6 billion cumulative savings between FY 1997 and FY 2003, and $2.3 billion in recurring savings each year thereafter, as a result of these efforts; (4) however, estimates of competitive savings provided to Congress in FY 1998 are overstated, and several issues are likely to reduce the estimated savings, at least in the short-term; (5) DOD has not fully calculated either the investment costs associated with undertaking these competitions or the personnel separation costs likely to be associated with implementing them; (6) further, there are numerous indications that DOD components have already begun to experience difficulties in launching and completing the competitions within the timeframes they initially projected; (7) as a result, the achievement of savings may be delayed; (8) various officials have expressed concern about the effects of not achieving the expected savings because reductions in future operating budgets have already been planned in anticipation of these savings; (9) comprehensive planning to identify specific functions and locations for competition among the services has been limited; (10) within individual military services, it has largely been up to individual installations or major commands to identify and prioritize specific activities and functions for study and to conduct competitions; and (11) the one service that has carried out a comprehensive assessment, the Air Force, has identified a potential shortfall in viable candidates for competition.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOD concurred with the recommendation to establish a baseline that would support evaluation of program goals and objectives. However, DOD does not believe that sufficient competitions have been completed to establish accurate metrics. In the interim, DOD will continue the program and budget review process to measure advancements towards goals and make adjustments as necessary.

    Recommendation: The Secretary of Defense should require DOD to assess to what extent available resources are sufficient to execute the numbers of planned competition within the timeframes envisioned and make such adjustments as needed to ensure adequate program execution.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: Through the program budget process, DOD reviews the competitive sourcing study targets, milestones and objectives of the program to measure advancements toward their goals. Program adjustments are made as necessary. DOD feels that while their program targets are aggressive and the program is met by a number of challenges, these targets can be met and the challenges overcome. DOD also feels that enough studies have not yet been completed to establish a baseline that would necessitate a reevaluation of their milestones and objectives. As more studies are completed, it will adjust its study and savings objectives, if necessary.

    Recommendation: he Secretary of Defense should require the components to reexamine and adjust as necessary the competitive sourcing study targets, milestones, expected net short-term savings, and the planned operating budget reductions.

    Agency Affected: Department of Defense


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