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GAO discussed the Office of Management and Budget's (OMB) Circular A-76 program, focusing on: (1) the program's effect on federal employees and managers; and (2) A-76 program implementation issues. GAO found that: (1) A-76 studies adversely affected employees' morale and productivity and frequently resulted in employee losses; (2) most employees that had their functions contracted out found other government jobs, frequently at the same installation, while the remainder either went to work for the contractor or resigned, retired, or were involuntarily separated; (3) agencies met only 33 percent of the governmentwide study goals because of poor implementation strategies; (4) managers believed that the program was time-consuming, difficult to implement, and disruptive; and (5) obstacles that hindered program implementation included burdensome and lengthy cost studies, unclear and inflexible program objectives, congressional restrictions, unrealistic study goals, and poorly written performance work statements that result in increased contract costs. GAO believes that OMB should adopt a more flexible strategy for implementing the A-76 program.

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