Forest Service: Better Planning, Guidance, and Data Are Needed to
Improve Management of the Competitive Sourcing Program		 
(22-JAN-08, GAO-08-195).					 
                                                                 
Competitive sourcing is aimed at promoting competition between	 
federal employees and the private sector as a way to improve	 
government operations. Key work activities--those that are either
inherently governmental or core to the agency's mission--are	 
generally exempt from competitions. In fiscal year 2004, Congress
began placing spending limitations on the Forest Service's	 
competitive sourcing program because of concerns about how the	 
program was managed. Also, like other agencies, the Forest	 
Service must report annually to Congress on the savings achieved 
from any competitions it conducted. GAO was asked to determine	 
the extent to which the Forest Service has (1) plans and guidance
to help implement its competitive sourcing program effectively	 
and (2) sufficient cost data to ensure that it complied with its 
spending limitations and accurately reported its savings to	 
Congress for fiscal years 2004 through 2006. To answer these	 
objectives, GAO examined the agency's strategic plan, guidance,  
and available cost data for competitive sourcing and interviewed 
key agency officials.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-195 					        
    ACCNO:   A79969						        
  TITLE:     Forest Service: Better Planning, Guidance, and Data Are  
Needed to Improve Management of the Competitive Sourcing Program 
     DATE:   01/22/2008 
  SUBJECT:   Competition					 
	     Cost analysis					 
	     Cost control					 
	     Data collection					 
	     Emergency management				 
	     Emergency preparedness				 
	     Emergency response 				 
	     Forest fires					 
	     Forest management					 
	     Land management					 
	     Noncompliance					 
	     Private sector					 
	     Program evaluation 				 
	     Program management 				 
	     Reporting requirements				 
	     Risk assessment					 
	     Risk management					 
	     Source selection					 
	     Strategic planning 				 
	     Wildfires						 
	     Program implementation				 

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GAO-08-195

   

     * [1]Results in Brief
     * [2]Background

          * [3]Competitive Sourcing Policy and Process
          * [4]Forest Service Green Plans and Feasibility Studies
          * [5]Competitive Sourcing Reporting Requirements and Spending Lim

     * [6]The Forest Service Does Not Have a Realistic Strategic Plan

          * [7]The Forest Service's Strategic Plan for Managing Its Competi
          * [8]The Forest Service Lacks Guidance to Ensure That Key Work Ac
          * [9]The Forest Service Lacks a Strategy to Assess the Cumulative

     * [10]The Forest Service Does Not Have Sufficient Competitive Sour

          * [11]The Forest Service's Interpretation of Costs That Are Subjec
          * [12]The Forest Service Did Not Ensure That Cost Data Used to Com
          * [13]The Forest Service Could Not Substantiate Savings Reported t
          * [14]The Forest Service Did Not Include All Costs Associated with

     * [15]Conclusions
     * [16]Recommendations for Executive Action
     * [17]Agency Comments
     * [18]Appendix I: Objectives, Scope, and Methodology
     * [19]Appendix II: Limitations on Use of Appropriations for "Compe

          * [20]Background
          * [21]Discussion
          * [22]Conclusion

     * [23]Appendix III: Comments from the Forest Service

          * [24]GAO Comments

     * [25]Appendix IV: GAO Contact and Staff Acknowledgments

          * [26]GAO Contact
          * [27]Staff Acknowledgments

               * [28]Order by Mail or Phone

Report to Congressional Requesters

United States Government Accountability Office

GAO

January 2008

FOREST SERVICE

Better Planning, Guidance, and Data Are Needed to Improve Management of
the Competitive Sourcing Program

GAO-08-195

Contents

Letter 1

Results in Brief 5
Background 7
The Forest Service Does Not Have a Realistic Strategic Plan or Adequate
Guidance to Effectively Implement Its Competitive Sourcing Program 13
The Forest Service Does Not Have Sufficient Competitive Sourcing Cost Data
to Demonstrate Compliance with Its Statutory Spending Limitations or to
Accurately Report Savings to Congress 23
Conclusions 30
Recommendations for Executive Action 31
Agency Comments 31
Appendix I Objectives, Scope, and Methodology 34
Appendix II Limitations on Use of Appropriations for "Competitive Sourcing
Studies and Related Activities" 36
Appendix III Comments from the Forest Service 42
Appendix IV GAO Contact and Staff Acknowledgments 47

Tables

Table 1: Forest Service's Completed Competitions, Fiscal Years 2004-2006
12
Table 2: Forest Service's Schedule for Conducting Feasibility Studies and
the Studies' Status as of September 30, 2007 15
Table 3: USDA OCFO Guidance for Conducting Competitive Sourcing
Feasibility Studies 16
Table 4: Percentages of Inherently Governmental and Core-Commercial
Activities Identified by the Forest Service Compared with the Percentages
Reported in the OMB-Approved FAIR Act Inventories, Fiscal Years 2004-2006
19

Figure

Figure 1: OMB Calculation for Determining Savings from Competitions,
Fiscal Years 2004-2006 26

Abbreviations

CSO competitive sourcing officer
CSPO Competitive Sourcing Program Office
FFIS Federal Financial Information System
FTE full-time-equivalent staff
ICS Incident Command System
IT information technology
MEO Most Efficient Organization
NWCG National Wildfire Coordinating Group
OCFO Office of the Chief Financial Officer
OMB Office of Management and Budget
PWS performance work statement
SDA U.S. Department of Agriculture

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United States Government Accountability Office
Washington, DC 20548

January 22, 2008

Congressional Requesters

The 2001 President's Management Agenda includes a governmentwide
initiative--known as competitive sourcing--that aims to improve government
efficiency and reduce the costs of government programs by promoting
competition between federal employees and private sector organizations.1
The competitions determine who should perform commercial
activities--activities performed by the government that are also regularly
performed in the commercial marketplace, such as information technology
(IT), maintenance and property management, and logistics. These
competitions compare the public and private sector costs of performing an
activity and may result in outsourcing federal jobs to the private sector.
In its competitive sourcing strategic plan, known as the Green Plan, the
Forest Service, an agency within the U.S. Department of Agriculture
(USDA), sets forth the agency's goal to conduct 14 precompetition studies
in 5 years to evaluate the feasibility of subjecting nearly two thirds of
its total workforce to competitive sourcing competitions.

The Forest Service manages about 193 million acres of land--about 30
percent of all federal lands--and has a workforce of about 37,000
full-time-equivalent staff (FTE). The employees are geographically
dispersed throughout the nation. In addition to its headquarters in
Washington, D.C., the Forest Service has 9 regional offices, 155 forest
offices, and about 600 district offices.

The Forest Service's competitive sourcing program is subject to the
requirements of the Office of Management and Budget's (OMB) Circular No.
A-76 (the circular) and the Federal Activities Inventory Reform Act of
1998 (the FAIR Act).2 Generally, the circular sets forth the competitive
process an agency must follow to determine whether federal employees or
private sector organizations should perform a commercial activity. The
competitive process can be divided into three stages: (1) a precompetition
planning stage that, among other things, determines the scope of the
competition; (2) a competition stage that begins with a public
announcement of a competition and ends with the selection of the
competition's winner; and (3) a postcompetition accountability stage,
which involves such activities as monitoring and reporting on the winner's
performance. The circular also directs agencies to create a staffing
plan--which creates an organization of agency employees that is known as
the "Most Efficient Organization" (MEO)--to be used to represent the
agency in the competition. After allowing for a transition period, the
winner of the competition, whether the MEO or a private sector
organization, is subject to the provisions of the postcompetition
accountability stage.

1 The Executive Office of the President and the Office of Management and
Budget, The President's Management Agenda (2001).

2 OMB Circular No. A-76, Performance of Commercial Activities (May 29,
2003), and Pub. L. No. 105-270, 112 Stat. 2382 (Oct. 19, 1998).

The FAIR Act, as implemented by the circular, requires federal agencies to
compile and submit to OMB for approval an annual inventory of the
activities their employees perform. The inventory must include the number
of FTEs that perform each activity and designate whether the activity is
inherently governmental or commercial. Inherently governmental
activities--such as setting policy or spending funds--are critical to the
role and function of government and, therefore, are exempt from
competition with the private sector. In contrast, commercial
activities--those that are not inherently governmental and could be
performed by the private sector--are subject to competitive sourcing
competitions, unless the agency exempts the activity. The agency may still
exempt a commercial activity if, for example, it deems the activity to be
core to the agency's mission (referred to as core-commercial).

In addition, the Consolidated Appropriations Act, 2004, requires executive
agencies to report annually to Congress on competitive sourcing
activities.3 Among other things, the act requires agencies to report
actual savings derived from implementing a competitive sourcing
competition. While the act does not provide direction on how to calculate
actual savings, OMB does provide this direction through annual guidance.4
The Forest Service, through USDA, reported to Congress that it saved over
$38 million in fiscal years 2004 through 2006 as a result of competitive
sourcing competitions.

3 Pub. L. No. 108-199, Div. F, Title VI, S 647(b), 118 Stat. 3, 361 (Jan.
23, 2004).

4 OMB memoranda, M-07-01 (Oct. 5, 2006); M-06-01 (Oct. 7, 2005); and
M-05-01 (Oct. 15, 2004).

Because of concerns about how the Forest Service was managing its
competitive sourcing program, Congress limited the funds that the Forest
Service could spend on competitive sourcing activities during fiscal years
2004 through 2007. In fiscal year 2004, the spending limitation was $5
million; in fiscal year 2005, it was $2 million; in fiscal year 2006, it
was $3 million; and in fiscal year 2007, it was also $3 million.5 The
Forest Service initiated 171 competitions in fiscal years 2002 and 2003,
and it has acknowledged that this first experience with the competitive
sourcing initiative fell short of expectations. For example, a
congressional study noted that nearly half of these competitions involved
three or fewer FTEs, and that, as a result, Forest Service officials
acknowledged that the competitions were unrealistic, adding that holding
competitions involving few FTEs often made it impossible for private
sector organizations to compete effectively.6 Two of the most important
lessons the Forest Service believes it has learned from this experience
are that it should (1) centralize responsibilities for competitions to
increase control and oversight and (2) plan competitions better by, for
example, identifying the appropriate scope of the competition.

The Forest Service has taken steps to improve the management of its
competitive sourcing program in both of these areas. In fiscal year 2003,
it strengthened headquarters' oversight of competitive sourcing
competitions. In fiscal year 2004, USDA issued guidance directing the
Forest Service to perform studies to assess the feasibility of conducting
a competition--known as feasibility studies--before committing to a
competition. Although not required by the circular, feasibility studies
are conducted during the precompetition planning stage and help determine
whether to compete an activity. Also, some of the steps required by the
circular during the precompetition planning stage are completed as part of
the study. In fiscal years 2004 through 2006, the Forest Service completed
three feasibility studies. They were for communications activities
(completed June 2005), the Geospatial Service and Technology Center
(completed April 2006),7 and fleet management activities (completed May
2006). During this time frame, the Forest Service also completed three
competitions, all begun in 2003 and completed in 2004. They were the IT
competition (1,200 FTEs, completed July 2004); the fleet maintenance
competition (57 FTEs, completed January 2004); and the road maintenance
competition (66 FTEs, completed January 2004).8

5 Department of the Interior and Related Agencies Appropriations Act, 2004,
Pub. L. No. 108-108, S 340(d)(3), 117 Stat. 1241, 1316 (Nov. 10, 2003);
Department of the Interior and Related Agencies Appropriations Act, 2005,
Pub. L. No. 108-447, div. E, S 332(a)(3), 118 Stat. 2809, 3100 (Dec. 8,
2004); Department of the Interior, Environment, and Related Agencies
Appropriations Act, 2006, Pub. L. No. 109-54, S 422(a)(2), 119 Stat. 499,
554 (Aug. 2, 2005); and Revised Continuing Appropriations Resolution,
2007, Pub. L. No. 110-5, S 104, 121 Stat. 8, 9 (Feb. 15, 2007) (operates
to retain the spending limitation imposed on the Forest Service in the
fiscal year 2006 appropriations act).

6 USDA, Forest Service, Report to Surveys and Investigations Staff,
Committee on Appropriations, U.S. House of Representatives, Implementation
of the Competitive Sourcing Initiative at the U.S. Forest Service (March
2004).

As with the management of its competitive sourcing program in fiscal years
2002 and 2003, the Forest Service's most recent competitive sourcing
activities have raised questions about whether the program is being
effectively managed. In this context, you asked us to determine the extent
to which the Forest Service has (1) plans and guidance to help implement
its competitive sourcing program effectively and (2) sufficient cost data
to ensure that it complied with its competitive sourcing statutory
spending limitations and accurately reported its competitive sourcing
savings to Congress for fiscal years 2004 through 2006.

To address these two objectives, we focused on the Forest Service's
competitive sourcing activities between fiscal years 2004 through 2006.
For the first objective, we examined the Forest Service's Green Plan and
how the Forest Service scoped the three competitions it completed during
this period. In doing so, we collected and reviewed pertinent OMB, USDA,
and Forest Service guidance and documentation, including documentation
related to the three completed competitions. In addition, we interviewed
Forest Service officials familiar with the agency's competitive sourcing
activities to better understand implementation of the program. For the
second objective, we examined the appropriations acts for fiscal years
2004 through 2006 to determine which costs incurred by the Forest Service
during that period were subject to the spending limitations. We obtained
available Forest Service cost data for activities associated with its
competitive sourcing program. We assessed the reliability of these data
and found them unreliable as a measure of the costs and savings associated
with the program. We conducted our work between October 2006 and January
2008 in accordance with generally accepted government auditing standards.
See appendix I for a more detailed description of our objectives, scope,
and methodology.

7 The Geospatial Service and Technology Center is a Forest Service facility
primarily located in Salt Lake City, Utah, that provides geographic data
and mapping services to all departments within the Forest Service.

8 There was a fourth competition completed during this time frame that
considered 8 FTEs. We excluded this competition from our analysis because
it was conducted using the streamlined competition process, which is
faster and less complex than the standard competition process that was
used for the other three competitions.

Results in Brief

The Forest Service lacks a realistic strategic plan and adequate guidance
to help ensure that it can effectively implement its competitive sourcing
program. Specifically, the Forest Service's Green Plan does not identify
the personnel and funding resources that are likely to be available to
implement the plan. These personnel and resource demands are likely to be
substantial because the plan proposes to subject all commercial
activities--affecting about two thirds of the agency's FTEs--to
feasibility studies. This includes a single "catch-all" feasibility study
covering 15,000 FTEs that was not included in a draft of the Green Plan
because the activities associated with these FTEs did not satisfy the
Forest Service's initial screening criteria for identifying good
candidates for feasibility studies. The Forest Service added the
additional "catch-all" feasibility study to its Green Plan because it was
directed by USDA to schedule feasibility studies for all eligible FTEs
without taking into account resource considerations. Furthermore, although
the Forest Service identified inherently governmental and core-commercial
activities in its annual FAIR Act inventories, Forest Service officials
responsible for planning the three competitions completed in fiscal year
2004 did not find the inventory data useful for identifying and exempting
those activities because, among other things, the officials believed that
the classifications used in the FAIR Act inventories did not capture the
actual work activities Forest Service employees carried out. Although the
officials said they received little guidance on how to supplement the FAIR
Act inventories or how to identify inherently governmental and
core-commercial activities, they do not believe that these inappropriate
activities were included in the competitions because of the relatively
small size and clearly commercial nature of these competitions. However,
without clear guidance, and in light of its plans to examine the
activities of two thirds of its workforce, we believe that the agency is
at risk of subjecting inherently governmental and core-commercial
activities to future competitive sourcing competitions. In addition, the
Forest Service lacks a strategy on how to assess the cumulative effect
that competing activities could have on its ability to fight wildland
fires and respond to other emergencies. Forest Service employees play a
prominent role in the nation's ability to fight wildland fires and respond
to emergencies. Outsourcing substantial numbers of Forest Service jobs to
the private sector could, over time, reduce this ability.

For fiscal years 2004 through 2006, we found that the Forest Service
lacked sufficiently complete and reliable cost data to (1) demonstrate its
compliance with appropriations acts' spending limitations on its
competitive sourcing activities and (2) accurately report competitive
sourcing savings to Congress. Regarding compliance with the statutory
spending limitations, the Forest Service did not collect cost data on all
activities related to competitive sourcing because it interpreted the
legislation narrowly--believing that some costs were not subject to the
spending limitations. For example, the Forest Service did not collect data
on the cost of employee salaries related to feasibility studies--a key
component of its competitive sourcing process. However, in our view, the
appropriations acts' spending limitations, with one exception, apply to
all costs attributable to the Forest Service's competitive sourcing
program--including, for example, the costs of salaries related to
feasibility studies. The one exception to the spending limitations is the
cost of activities incurred to carry out the FAIR Act, such as preparing
inventories, because this act requires the Forest Service to perform these
activities even in the absence of other competitive sourcing activities.
(See app. II for our full legal interpretation.) Moreover, the Forest
Service failed to ensure the reliability of the cost data that it did
collect to determine compliance with statutory spending limitations. As a
result, the Forest Service cannot know if it exceeded the appropriations
acts' spending limitations, even using its own narrow interpretation of
which costs are subject to the spending limitations. Regarding savings
reported to Congress, the Forest Service could not provide us with
sufficient data or the methodology it used to calculate savings derived
from competitions, and, as a result, we could not verify the accuracy of
the reported savings. In addition, we found that the Forest Service did
not consider certain substantial costs in its savings calculations, and
thus Congress may not have an accurate measure of the savings produced by
the Forest Service's competitive sourcing competitions. Although OMB
provides guidance on how to calculate the savings, the guidance does not
specify all of the costs that should be included in the calculations, thus
providing the Forest Service with some discretion on which costs to
include. Some of the costs the Forest Service did not include in the
calculations substantially reduce or even exceed the savings reported to
Congress. For example, regarding the IT infrastructure competition, the
Forest Service did not include the $40 million that it cost to make the
transition to the MEO. This amount is $5 million more than the $35 million
in savings that the agency reported to Congress.

We are recommending that the Secretary of Agriculture direct the Chief of
the Forest Service to improve how the agency manages its competitive
sourcing program to help ensure that it has a realistic strategic plan,
excludes inappropriate activities from competitive sourcing competitions,
maintains its capacity to respond to wildland fires, and has the cost data
necessary to comply with appropriations acts' spending limitations and to
accurately report savings to Congress. In commenting on a draft of this
report, the Forest Service generally agreed with our recommendations but
had concerns about some of the specific findings and conclusions in the
report. The agency's concerns and our responses to them are presented in
appendix III.

Background

The Forest Service's mission includes sustaining the nation's forests and
grasslands, managing the productivity of those lands for the benefit of
citizens, conserving open space, enhancing outdoor recreation
opportunities, and conducting research and development. To help fulfill
its mission, the Forest Service devotes considerable resources to
suppressing wildfires. To coordinate the firefighting efforts of the
Forest Service and other federal land management agencies, the interagency
National Wildfire Coordinating Group (NWCG) was established.9 This group
adopted an interagency incident command system (ICS) and firefighting
standards for responding to wildland fires. Federal employees in the land
management agencies assume specific roles within the ICS, a command
structure used at all levels of government and organized around five
primary functional areas: command, operations, planning, logistics, and
finance and administration.

There are about 80,000 federal employees and retirees who mobilize to
assist state and local organizations to fight fires and respond to
national emergencies as needed. These employees must receive standardized
training and be certified in specific ICS duties (e.g., communications,
aircraft management, and dispatch) before being available to respond to
wildfires and other emergencies.

Approximately 30,000 permanent Forest Service employees are ICS-certified,
with 10,000 to 12,000 of these employees holding fire-related positions.
The remaining 18,000 to 20,000 employees are part of the "Forest Service
militia." These are employees who are ICS-certified to fight fires but for
whom the militia duty is a volunteer, collateral duty. These militia
members will often leave their primary work duties and travel to the
incident scene to provide assistance. A militia member may typically spend
between 1 to 3 weeks each year fighting wildfires and responding to
emergency situations. Militia teams that assisted the Federal Emergency
Management Agency following Hurricane Katrina logged as many as 60 to 90
days of duty. As part of their militia duties, Forest Service employees
often perform activities related to their regular work duties. For
example, when responding to a wildfire, an employee whose regular duties
involve IT support might provide this support at the scene of the fire.
Employees may also perform militia duties that are unrelated to their
regular work duties. For example, an IT employee who is ICS-certified in
logistics might be responsible for providing food, supplies, and equipment
at the scene of a fire.

9 The NWCG draws on employees from the Forest Service and from the
Department of the Interior's Bureau of Land Management, Bureau of Indian
Affairs, Fish and Wildlife Service, and National Park Service.

Competitive Sourcing Policy and Process

The federal government has had a long-standing acquisition policy that,
when permissible and cost-effective, agencies are to rely on the private
sector to perform activities that are regularly performed in the
commercial marketplace, such as IT, maintenance and property management,
and logistics. This policy was laid out in OMB's 1966 Circular No. A-76,
which was last revised in 2003.10 The circular's stated goal is to obtain
maximum value for taxpayers' dollars by taking advantage of competitive
forces. This policy, described in the 2001 President's Management Agenda
as competitive sourcing, is one of five governmentwide initiatives
intended to improve the federal government's management and performance so
that resources entrusted to the federal government are well managed and
used wisely.11 In addition, the circular provides agency management with a
structured process to compare the public and private sector costs of
performing an activity and to select the lowest cost provider through
competition. This comparison may result in outsourcing federal jobs to the
private sector.

The first step toward competitive sourcing is identifying work activities
that are suitable for competition. The FAIR Act, as implemented by the
circular, requires federal agencies to annually inventory all of the
activities that federal employees perform--the FAIR Act inventory. For the
inventory, activities are classified as inherently governmental or
commercial. Specifically:

10 OMB Circular No. A-76, Performance of Commercial Activities (May 29,
2003).

11 See The President's Management Agenda (2001). The five initiatives are
strategic management of human capital, improved financial performance,
expanded electronic government, budget and performance integration, and
competitive sourcing.

           o Inherently governmental activities are those activities that are
           so intimately related to the public interest that they require
           performance by federal government employees.12 The circular
           exempts these activities from competition.
           o Commercial activities are those that are not inherently
           governmental and could be performed by the private sector.
           Commercial activities listed in the FAIR Act inventory are subject
           to the competition process detailed in the circular, unless they
           are placed in a subcategory of commercial activities that are
           exempt from competition.
           o Core-commercial activities are those in a subcategory of
           commercial activities that are identified to be essential, or
           "core," to the agency's mission.13 The circular allows agencies to
           exempt these activities from competition with sufficient written
           justification.14

           To determine whether federal employees or private sector
           organizations should perform commercial activities, the circular
           establishes the following three-stage competitive process
           (referred to as an A-76 competition):

           o A precompetition planning stage that, among other things,
           determines the scope of the competition. In this stage, the agency
           determines the commercial activities to be competed and the
           precompetition cost to perform that activity. It also appoints
           competition officials who will be in charge of developing, for
           example, the performance work statement (PWS), which specifies the
           work to be performed by the winning bidder. In addition, agency
           officials unaffiliated with the PWS create the MEO, which is
           generally a smaller, streamlined version of the government
           organization that is currently doing the work.
           o A competition stage that begins with a public announcement of a
           competition and ends with the selection of the competition's
           winner. During this stage, an agency develops and issues a
           solicitation, receives offers, and follows a process to select the
           winning bidder.
           o A postcompetition accountability stage that involves such
           activities as monitoring and reporting on the winner's
           performance, whether that winner is the MEO or a private sector
           organization.
			  
12 The FAIR Act, Pub. L. No. 105-270, S 5, 112 Stat. 2382, 2384 (Oct. 19,
1998).

13 OMB guidance for use of commercial exemption justifications states the
following: "As a general matter, a function should be considered core to
an agency's operation only if--and only to the extent that--loss of
in-house performance of the function would result in substantial risk to
the agency's ability to accomplish its unique mission." See OMB, 2005
Inventories of Commercial and Inherently Governmental Activities, M-05-12
(May 23, 2005).

14 Besides core-commercial, there are four other subcategories of
commercial activities that are exempt from competition. Commercial
activities are exempt if they are (1) subjects of an in-progress A-76
competition, (2) performed by government personnel as the result of an
A-76 competition within the past 5 years, (3) involved in agency
restructuring, or (4) performed by government personnel due to a statutory
prohibition against private sector performance.

           The circular also directs agencies to designate a competitive
           sourcing official (CSO) with responsibility for implementing the
           circular who, with certain exceptions, may delegate those
           responsibilities to other officials in the agency. USDA designated
           its Chief Financial Officer as its CSO. He and his office, the
           Office of the Chief Financial Officer (OCFO), provide oversight to
           USDA and its agencies, including the Forest Service.

           In 2002, the Forest Service established the Competitive Sourcing
           Program Office (CSPO) in its headquarters. The CSPO oversees the
           preparation of the FAIR Act inventory and provides written
           guidance to employees throughout the agency. In 2003, competitive
           sourcing responsibilities were further centralized in the CSPO to
           include oversight of A-76 competitions and postcompetition
           reporting. Supporting the CSPO are regional, national forest, and
           district office staffs.
			  
			  Forest Service Green Plans and Feasibility Studies

           OMB requires that agencies develop a strategic plan--known as a
           Green Plan--for implementing their competitive sourcing
           programs.15 OMB's guidance on how to develop a Green Plan
           describes it as a long-range plan to ensure that competitive
           sourcing is a carefully and regularly considered option for
           improving the cost-effectiveness and quality of an agency's
           commercial activities. According to the guidance, agencies should
           include in the plan a description of how they are going to take
           timely and effective advantage of competition, a list of
           activities being announced for competition, an overview of their
           decision-making process, and a strategy to limit potential
           constraints on competition. The guidance also requires that
           agencies update their plans as organizational conditions change.
           To comply, the Forest Service has periodically submitted its Green
           Plan to USDA for incorporation into the department-level Green
           Plan, which is then presented to OMB for approval. Since December
           2003, the Forest Service has submitted at least five versions of
           its Green Plan to USDA. The Forest Service's most recent
           OMB-approved Green Plan was issued in December 2005 and covers
           fiscal years 2005 through 2009.
			  
15 The name Green Plan is derived from the July 2003 OMB standards for
evaluating federal agencies' progress in implementing PMA initiatives.
These standards describe the degree of each agency's progress as red,
yellow, or green, where green is considered fully successful. One OMB
standard requires federal agencies to develop a competition plan as a
requirement to earn green status for the competitive sourcing initiative.

           In its Green Plan, the Forest Service proposes conducting a series
           of competitive sourcing feasibility studies before holding A-76
           competitions. Feasibility studies enable an agency to first
           examine the practicality of subjecting activities to a competition
           before committing to one. OMB recognizes the value of this step
           and has recommended in its guidance that agencies conduct
           feasibility studies to streamline the competitive sourcing
           process. The OCFO issued guidance in May 2004 on conducting
           feasibility studies that outlined USDA agencies' responsibilities
           and specific procedures to be followed during a feasibility study.

           The Forest Service typically assembles a team of six to eight
           employees to conduct a feasibility study. Each study usually
           involves one or more requests for data from field offices, which
           may require information from several hundred Forest Service
           employees. In addition to recommending whether to proceed with an
           A-76 competition, a Forest Service feasibility study can make
           other recommendations, such as to reorganize the way in which the
           Forest Service performs the activity being studied without
           engaging in an A-76 competition. When the feasibility study is
           completed, the Chief of the Forest Service reviews the study
           team's report and recommendations and decides on the best course
           of action, which may or may not be an A-76 competition.

           In fiscal years 2004 through 2006, the Forest Service completed
           three A-76 competitions (see table 1).

           Table 1: Forest Service's Completed Competitions, Fiscal Years
           2004-2006
			  
Activity: Information technology infrastructure; 
FTEs: 1,200; 
Winner announcement date: July 2004; 
Competition winner: MEO. 

Activity: Fleet maintenance; 
FTEs: 57; 
Winner announcement date: January 2004; 
Competition winner: Private sector contractor. 

Activity: Road maintenance; 
FTEs: 66; 
Winner announcement date: January 2004; 
Competition winner: MEO. 

           Source: USDA.
			  
			  Competitive Sourcing Reporting Requirements and Spending Limitations

           The Consolidated Appropriations Act, 2004, requires executive
           agencies, such as USDA, to report to Congress on their competitive
           sourcing activities for the prior fiscal year, including the total
           number of competitions announced and completed; the incremental
           costs directly attributable to conducting these competitions; and
           the total savings actually, or estimated to be, derived from such
           competitions. As an agency within USDA, the Forest Service must
           report this information to USDA for inclusion in USDA's report to
           Congress.

           Congress also limited the Forest Service's funds available for
           "competitive sourcing studies and related activities" in each
           year's appropriations act for fiscal years 2004 through 2007,
           because of concerns about how the Forest Service had implemented
           its competitive sourcing initiative. Specifically, the spending
           limitations were $5 million (fiscal year 2004), $2 million (fiscal
           year 2005), $3 million (fiscal year 2006), and $3 million (fiscal
           year 2007).16
			  
16 See footnote 5.

           The Forest Service Does Not Have a Realistic Strategic Plan or
			  Adequate Guidance to Effectively Implement Its Competitive Sourcing
			  Program

           The Forest Service lacks a realistic strategic plan and adequate
           guidance to help ensure that it can effectively and efficiently
           implement its competitive sourcing program. Specifically, the
           Forest Service's Green Plan proposes to subject all commercial
           activities to feasibility studies without identifying the
           personnel and funding resources that are likely to be available
           for the studies. Furthermore, Forest Service officials responsible
           for planning the three competitions completed in fiscal year 2004
           told us that they did not find the FAIR Act inventory data useful
           for identifying and exempting inherently governmental and
           core-commercial activities, and that they received little guidance
           on how to supplement the inventory data or how to identify
           inherently governmental and core-commercial activities without
           using the inventory data. Nevertheless, Forest Service officials
           told us that the lack of guidance did not result in competing
           inherently governmental and core-commercial activities because of
           the small size and commercial nature of these competitions.
           However, without clear guidance, we believe that the agency risks
           subjecting inherently governmental and core-commercial activities
           to future A-76 competitions. In addition, the Forest Service does
           not have a strategy on how to assess the cumulative effect that
           competing activities could have on its ability to fight wildland
           fires and respond to other emergencies, even though outsourcing a
           large number of federal jobs to the private sector could reduce
           the availability of certified responders in the long term.
			  
			  The Forest Service's Strategic Plan for Managing Its Competitive
			  Sourcing Program Is Not Realistic

           The Forest Service's December 2005 Green Plan for managing its
           competitive sourcing program is not realistic because it does not
           take into account the personnel and funding resources that are
           likely to be available to implement the plan, even though it
           proposes to subject all commercial activities--performed by
           approximately 24,500 FTEs--to feasibility studies during fiscal
           years 2005 through 2009. This is a significant increase over the
           activities it proposed to study in a draft of this plan issued 5
           months earlier in July 2005. The July 2005 draft Green Plan
           scheduled 13 feasibility studies for activities associated with
           6,180 FTEs for fiscal years 2005 through 2009. The Forest Service
           selected these activities by identifying good candidates for
           feasibility studies and then selecting a level of effort the
           officials believed could be managed over the next 5 years. For
           example, in selecting the studies, the officials said they
           considered the complexity of the studies, the additional workload
           that would result from conducting them, and the personnel
           resources required in selecting these activities. The Forest
           Service used the following nine criteria as the basis for
           identifying good candidates for feasibility studies:

           o Potential for savings. An activity with greater potential for
           savings through more effective or efficient performance is
           considered a stronger candidate for a feasibility study.
           o Availability of private sector contractors. An activity
           performed by a large number of commercial companies is considered
           a stronger candidate for a feasibility study.
           o Severability. An activity that can be performed by an
           independent business unit is considered a stronger candidate for a
           feasibility study.
           o Preferred government performance. An activity that management
           prefers to be performed by a government position is considered a
           weaker candidate for a feasibility study.
           o Location. An activity that does not have to be performed locally
           is considered a stronger candidate for a feasibility study.
           o Fragmentation. An activity that is the minor responsibility of a
           large number of positions, while difficult to compete, may benefit
           from restructuring and is considered a stronger candidate for a
           feasibility study.
           o Centrality of performance. An activity that is typically
           performed at a central location is considered a stronger candidate
           for a feasibility study.
           o Potential for process improvement. An activity with a greater
           potential for improvement through modernization, reorganization,
           or some other means is considered a stronger candidate for a
           feasibility study.
           o Impact on incident support. An activity that supports emergency
           situations, such as firefighting, is considered a weaker candidate
           for a feasibility study.

           However, after reviewing the Forest Service's proposed Green Plan,
           USDA directed the Forest Service to revise its plan to include all
           24,512 commercial FTEs eligible for competition in either a
           feasibility study or an A-76 competition. In response, the Forest
           Service issued a revised Green Plan in December 2005, which OMB
           subsequently approved. The revised plan included a single
           "catch-all" feasibility study--labeled "All Other Commercial B
           Activities"--which had 15,000 FTEs associated with it,17 nearly
           all of the commercial FTEs not already identified in the draft
           Green Plan. According to a Forest Service official, the additional
           feasibility study was added to comply with the USDA directive to
           include all commercial FTEs in the Green Plan, not because it
           included activities that might benefit from an A-76 competition.
           OCFO officials explained to us that USDA agencies have an option
           to perform feasibility studies to identify good candidates for
           more targeted feasibility studies, and that this was the purpose
           of the 15,000 FTE feasibility study. As of September 30, 2007, the
           Forest Service had not started this study.
			  
17 Commercial B activities are commercial activities suitable for
competition--they exclude inherently governmental and core-commercial
activities.

           As table 2 shows, the Forest Service had completed only five of
           the nine feasibility studies scheduled to be completed by
           September 30, 2007. The completed studies account for only 2,580
           FTEs of the approximately 19,000 FTEs that were scheduled to be
           studied by this date.

Table 2: Forest Service's Schedule for Conducting Feasibility Studies and
the Studies' Status as of September 30, 2007

Activities subject to feasibility study: Communication; 
FTEs: 750; 
Proposed beginning date: April 2005; 
Proposed completion date: June 2005; 
Feasibility study begun: Yes; 
Feasibility study completed: Yes[A]. 

Activities subject to feasibility study: Aviation & Other Airborne 
Activities; 
FTEs: 500; 
Proposed beginning date: October 2005; 
Proposed completion date: March 2006; 
Feasibility study begun: Yes; 
Feasibility study completed: Yes. 

Activities subject to feasibility study: Fleet Management; 
FTEs: 135; 
Proposed beginning date: October 2005; 
Proposed completion date: March 2006; 
Feasibility study begun: Yes; 
Feasibility study completed: Yes. 

Activities subject to feasibility study: Geospatial Services & Tech 
Center; 
FTEs: 95; 
Proposed beginning date: October 2005; 
Proposed completion date: March 2006; 
Feasibility study begun: Yes; 
Feasibility study completed: Yes. 

Activities subject to feasibility study: Computer Application 
Development; 
FTEs: 750; 
Proposed beginning date: September 2006; 
Proposed completion date: March 2007; 
Feasibility study begun: No; 
Feasibility study completed: No. 

Activities subject to feasibility study: NEPA Information Collection & 
Analysis; 
FTEs: 1,100; 
Proposed beginning date: September 2006; 
Proposed completion date: May 2007; 
Feasibility study begun: Yes; 
Feasibility study completed: Yes. 

Activities subject to feasibility study: Dispatch/Coordination System; 
FTEs: 300; 
Proposed beginning date: September 2006; 
Proposed completion date: March 2007; 
Feasibility study begun: Yes; 
Feasibility study completed: No. 

Activities subject to feasibility study: All Other Commercial B 
Activities; 
FTEs: 15,000; 
Proposed beginning date: October 2006; 
Proposed completion date: February 2007; 
Feasibility study begun: No; 
Feasibility study completed: No. 

Activities subject to feasibility study: Fire & Aviation Training; 
FTEs: 300; 
Proposed beginning date: March 2007; 
Proposed completion date: September 2007; 
Feasibility study begun: Yes; 
Feasibility study completed: No. 

Activities subject to feasibility study: Fuels Management Program; 
FTEs: 500; 
Proposed beginning date: September 2007; 
Proposed completion date: March 2008; 
Feasibility study begun: No; 
Feasibility study completed: [Empty]. 

Activities subject to feasibility study: Technology or Service Centers; 
FTEs: 200; 
Proposed beginning date: April 2008; 
Proposed completion date: September 2008; 
Feasibility study begun: [Empty]; 
Feasibility study completed: [Empty]. 

Activities subject to feasibility study: Safety & Occupational Health; 
FTEs: 150; 
Proposed beginning date: September 2008; 
Proposed completion date: March 2009; 
Feasibility study begun: [Empty]; 
Feasibility study completed: [Empty]. 

Activities subject to feasibility study: Engineering Design & 
Development; 
FTEs: 900; 
Proposed beginning date: September 2008; 
Proposed completion date: May 2009; 
Feasibility study begun: [Empty]; 
Feasibility study completed: [Empty]. 

Activities subject to feasibility study: Fire Preparedness Program; 
FTEs: 500; 
Proposed beginning date: November 2008; 
Proposed completion date: May 2009; 
Feasibility study begun: [Empty]; 
Feasibility study completed: [Empty]. 

Activities subject to feasibility study: Total; 
FTEs: 21,180[B]. 

Source: Forest Service.

a The Forest Service used a private consultant to perform the communication
feasibility study. The study was completed but not accepted by the Forest
Service because it did not meet OCFO requirements.

b While the revised Green Plan states that the agency plans to conduct
feasibility studies on activities associated with 24,512 FTEs, the plan
actually scheduled only studies for activities associated with 21,180
FTEs, with an additional 130 FTEs scheduled for an A-76 competition
concerning communication activities. The remaining 3,202 FTEs are
unaccounted for.

In our previous work,18 we found that effective strategic plans take into
account the resources required to implement the plan, such as human
capital, technology, and information. While Forest Service officials could
not provide us with any documents showing resources involved in conducting
feasibility studies, the effort does not appear to be insignificant.
According to OCFO guidance, 13 separate steps are involved in conducting
feasibility studies, with many of the procedures involving several
additional subtasks. Table 3 shows OCFO's guidance for conducting
feasibility studies.

Table 3: USDA OCFO Guidance for Conducting Competitive Sourcing
Feasibility Studies

Procedure: Business needs assessment; 
Description of activities involved: 
* Evaluate core public need for activity; 
* Identify key factors that affect performance of activity; 
* Align activity with agency's strategic goals and objectives. 

Procedure: Assumptions and constraints; 
Description of activities involved: 
* List all assumptions regarding the work performed for the activity; 
- For example, scope, timelines, workload requirements, necessary 
technology, customers, partners, stakeholders, funding, security, and 
outside support; 
* List all constraints regarding the work performed for the activity; 
- For example, time, budget, organizational, structure, and physical 
factors. 

Procedure: Market research; 
Description of activities involved: 
* Analyze capabilities of commercial marketplace; 
* Determine if alternative sources can satisfy the requirements of the 
activity; 
* Create inventory of all commercial firms that produce, distribute, 
and support products and/or services similar to activity; 
* Ensure that all market research complies with Federal Acquisition 
Regulation Part 10 requirements. 

Procedure: Current "as-is" assessment; 
Description of activities involved: 
* Describe "as-is" scope of current operations; 
- Discuss current workload, customers, partners, and stakeholders; 
- Describe pros and cons of current operations; 
- Describe workflow, required human capital resources; 
- Provide overview of how internal functions work with one another; 
- Describe potential effects on other USDA and non-USDA organizations 
should the activity be outsourced. 

Procedure: Future "to-be" assessment; 
Description of activities involved: 
* Present a "to-be" scope of operations; 
* Analyze expected workload, potential growth, future customers, and 
stakeholders; 
* Develop "most-efficient organization" model to accomplish the 
activity. 

Procedure: Performance gap analysis; 
Description of activities involved: 
* Define the gaps between the "as-is" and "to-be" scopes of operation; 
* Prioritize performance gaps from most-to least-critical. 

Procedure: Cost/Benefit analysis; 
Description of activities involved: 
* Compare cost and benefits of all options for performing the activity 
to determine the most cost-effective solution; 
- Calculate cost estimate; For example, labor, employee benefits, 
materials, facilities, contractor expenses, and miscellaneous costs; 
- Calculate benefits estimate; Estimate the overall public-value added 
(in dollars) of performing the activity; 
- Perform savings analysis; Compare "bottom line" of each performance 
option. 

Procedure: Civil rights impact assessment; 
Description of activities involved: 
* Identify and categorize the civil-rights impact of implementing 
competitive sourcing in accordance with USDA Office of Civil Rights 
policy guidance; 
* Identify any potential risk of violation. 

Procedure: Systems; 
Description of activities involved: 
* Provide an overview of all capital infrastructure systems and their 
relationships; 
- Current systems used to support activity; System-to-system 
interfaces; Planned or in-progress system upgrades; 
* Identify how the alternative options conform to the agency's IT 
architecture standards and guidelines. 

Procedure: Acquisition strategy; 
Description of activities involved: 
* Develop resource acquisition plan for competitive sourcing option; 
* Identify expected performance levels; 
* Develop oversight mechanism to ensure that minimum performance 
standards are met. 

Procedure: Project life-cycle schedule; 
Description of activities involved: 
* Identify major activities, milestones, and transition timelines from 
"as-is" to "to-be" system, including all necessary tasks and subtasks 
related to the activity. 

Procedure: Requirements; Description of activities involved: * List the 
items needed to complete the activity. 

Procedure: Recommendations; Description of activities involved: 
* Recommend future course of action based on feasibility study results; 
* If competitive sourcing is recommended, identify timelines set forth 
in the circular. 

Source: USDA OCFO, Guidance for Determining the Feasibility of Conducting
Competitive Sourcing Competitions, Bulletin 2004-001 (May 11, 2004).

18 GAO, Congressional Review of Agency Strategic Plans, [29]GAO/GGD-10.1.16
(Washington, D.C.: May 1997); Transforming the Civil Service: Building the
Workforce Of the Future, Results Of a GAO-Sponsored Symposium,
GAO/GGD-96-35 (Washington, D.C.: Dec. 20, 1995); Managing for Results:
Experiences Abroad Suggest Insights for Federal Management Reform,
[30]GAO/GGD-95-120 (Washington, D.C.: May 2, 1995); Managing for Results:
State Experiences Provide Insights for Federal Management Reforms,
[31]GAO/GGD-95-22 (Washington, D.C.: Dec. 21, 1994); Government Reform:
Goal-Setting and Performance, [32]GAO/AIMD/GGD-95-130R (Washington, D.C.:
Mar. 27, 1995); and Executive Guide: Improving Mission Performance Through
Strategic Information Management and Technology, [33]GAO/AIMD-94-115
(Washington, D.C.: May 1994).

According to a senior Forest Service official, while the agency considered
personnel requirements when selecting the original 13 activities for
feasibility studies, it did not do so when it expanded the Green Plan to
include all commercial FTEs. According to this official, there would be no
practical way to conduct the 15,000-FTE study because it would include so
many dissimilar activities. Consequently, FTEs would first need to be
grouped into many separate activities, each requiring its own feasibility
study, and as the number of studies increased, so too would the demands
placed on Forest Service personnel. Several senior Forest Service
officials with whom we spoke said that it is inconceivable that the
schedule of feasibility studies in the OMB-approved Green Plan for fiscal
years 2005 through 2009 could be met.

Just as it did not take into account personnel resources in its
OMB-approved December 2005 Green Plan, the Forest Service also did not
consider congressionally directed funding limitations. While the Forest
Service's July draft Green Plan acknowledged the fiscal year 2005 $2
million statutory spending limitation on the Forest Service's competitive
sourcing activities, the December Green Plan did not. In directing the
Forest Service to include all commercial activities in the plan, USDA said
to do so as if there were no funding limitations. Because Congress had
placed limitations on the Forest Service's spending for competitive
sourcing activities in the previous 2 fiscal years--2004 and
2005--factoring in the possibility of limited funds available in future
years would have been appropriate.

The Forest Service Lacks Guidance to Ensure That Key Work Activities Are
Excluded from A-76 Competitions

Since an agency's FAIR Act inventory designates all of an agency's FTEs as
inherently governmental, commercial, or commercial but exempt from
competition (e.g., core-commercial), the development of an accurate
inventory becomes the foundation for determining which activities agencies
select for competition. As we have previously reported,19 other agencies
have had difficultly in classifying positions when preparing their FAIR
Act inventories, and the Forest Service is no exception. The Forest
Service's difficulty is exemplified by significant fluctuations in the
percentages of inherently governmental activities in its inventory data
for fiscal years 2004 through 2006. In addition, there are differences
between the Forest Service's initial classifications and those reported in
the agency's OMB-approved Fair Act inventory. See table 4.

19 GAO, Competitive Sourcing: Greater Emphasis Needed on Increasing
Efficiency and Improving Performance, [34]GAO-04-367 (Washington, D.C.:
Feb. 27, 2004).

Table 4: Percentages of Inherently Governmental and Core-Commercial
Activities Identified by the Forest Service Compared with the Percentages
Reported in the OMB-Approved FAIR Act Inventories, Fiscal Years 2004-2006

Fiscal year: 2004; 
Inherently governmental activities: Percentage identified by the Forest 
Service: 21%; 
Inherently governmental activities: Percentage reported in the Forest 
Service's OMB-approved FAIR Act inventory: 21%; 
Core-commercial activities: Percentage Identified by the Forest 
Service: 14%; 
Core-commercial activities: Percentage reported in the Forest Service's 
OMB-approved FAIR Act inventory: 0%. 

Fiscal year: 2005; 
Inherently governmental activities: Percentage identified by the Forest 
Service: 54; 
Inherently governmental activities: Percentage reported in the Forest 
Service's OMB-approved FAIR Act inventory: 21; 
Core-commercial activities: Percentage Identified by the Forest 
Service: 13; 
Core-commercial activities: Percentage reported in the Forest Service's 
OMB-approved FAIR Act inventory: 0. 

Fiscal year: 2006; 
Inherently governmental activities: Percentage identified by the Forest 
Service: 7; 
Inherently governmental activities: Percentage reported in the Forest 
Service's OMB-approved FAIR Act inventory: 7; 
Core-commercial activities: Percentage Identified by the Forest 
Service: 13; 
Core-commercial activities: Percentage reported in the Forest Service's 
OMB-approved FAIR Act inventory: 13. 

Source: Forest Service.

According to a Forest Service official involved in preparing the agency's
FAIR Act inventory, the fluctuations in the percentages of FTEs designated
as inherently governmental--ranging from a high of over 50 percent to a
low of 7 percent--were the result of changes from year to year in both the
Forest Service's criteria for classifying activities, and the methodology
it used to calculate the percentages of FTEs performing inherently
governmental activities. In addition, the differences in the percentages
of FTEs designated as core-commercial activities stemmed from
disagreements between the Forest Service and OMB about what constituted a
core-commercial activity. Specifically, in fiscal years 2004 and 2005, OMB
did not approve the Forest Service's written justifications for
core-commercial activities. Instead, it directed the Forest Service to
reclassify all of the activities the agency had identified as
core-commercial activities to commercial, thus making these activities
eligible for competition.

The Forest Service's lack of consistency in its classification
methodology, coupled with disagreement between the Forest Service and OMB
regarding activity classifications, call into question the accuracy and
usefulness of the Forest Service's FAIR Act inventory data for identifying
inherently governmental and core-commercial activities when planning
specific A-76 competitions. Forest Service officials told us that the FAIR
Act inventory represents only a "rough snapshot" of the inherently
governmental and core-commercial activities within the Forest Service, and
that much additional work must be done to identify specific activities
suitable for competition. They raised the following concerns about using
FAIR Act inventory data to identify inherently governmental and
core-commercial activities:

           o Improper classification of activities in the FAIR Act inventory.
           Disagreements between the Forest Service and USDA regarding
           activity designations raise questions about appropriate
           classification. Furthermore, agency employees may be tempted to
           classify an activity as either inherently governmental or
           core-commercial to exempt it from competition.
           o Mandatory use of OMB function codes. The Forest Service is
           required by OMB to use OMB-assigned function codes for the FAIR
           Act inventory. Although the guidance allows the Forest Service
           flexibility in defining the codes, the officials told us that some
           of the codes were too broad to be of any use or did not capture
           the actual work activities Forest Service employees carried out.20

           Because Forest Service officials did not find the agency's FAIR
           Act inventory data useful during the A-76 precompetition planning
           stage, those officials responsible for the three completed
           competitions--IT infrastructure, road maintenance, and fleet
           maintenance--said that they developed their own methodologies to
           classify inherently governmental and core-commercial activities.
           For each competition, agency officials collected additional work
           activity information from field offices and performed additional
           analysis beyond that conducted for the FAIR Act inventory. In
           doing so, officials said, they received little guidance on how to
           supplement the FAIR Act inventory data or how to identify
           inherently governmental and core-commercial activities during the
           precompetition stage of the completed competitions.

           Despite the lack of guidance, Forest Service officials involved in
           the three completed competitions said that they succeeded in
           identifying and exempting from competition inherently governmental
           and core-commercial activities by relying on intuitive knowledge
           and outside consultants. Officials were confident of their success
           because of their expertise in the activity being competed; the
           clearly commercial nature of the activities; and the small size of
           the competitions, especially the fleet maintenance and the road
           maintenance competitions. However, the three completed
           competitions may not be representative of future competitions.

20 As we have previously reported, the inapplicability of the OMB-assigned
codes has been a problem for many other federal agencies. Our prior work
on this issue includes [35]GAO-04-367 and Competitive Contracting: The
Understandability of FAIR Act Inventories Was Limited, [36]GAO/GGD-00-68
(Washington, D.C.: Apr. 14, 2000).

           Since these competitions, USDA and the Forest Service have taken
           steps to better define inherently governmental and core-commercial
           activities for the purposes of completing the FAIR Act
           inventory.21 However, while we believe that the FAIR Act inventory
           data could be a useful tool for planning competitive sourcing
           activities at an agencywide level--for example, they can form the
           basis of the Green Plan--we believe that additional guidance will
           be needed on how to classify work activities during the
           precompetition planning stage of an A-76 competition to ensure
           that key work activities are excluded from the specific
           competition being planned. Without such guidance, the Forest
           Service is at risk of subjecting inherently governmental and
           core-commercial activities to A-76 competitions. This is
           particularly true as the Forest Service continues to implement its
           Green Plan, which could potentially subject up to two thirds of
           its FTEs to A-76 competitions.
			  
			  The Forest Service Lacks a Strategy to Assess the Cumulative Effect
			  That A-76 Competitions Could Have on Its Ability to Respond to
			  Wildland Fires and Other Emergencies

           For the three competitions the Forest Service completed--IT
           infrastructure, road maintenance, and fleet maintenance--officials
           responsible for planning the competitions told us they likely had
           a negligible effect on the Forest Service militia's ability to
           fight fires and respond to emergencies for the following reasons:

           o The three competitions affected a relatively small number of
           Forest Service employees--1,323--compared with the approximately
           80,000 federal employees who are ICS-certified.
           o Contract provisions required the winning organization to provide
           emergency incident support for activities within the scope of the
           contract. For example, the MEO that won the road maintenance
           competition was obligated to provide road maintenance, if needed,
           to support the response to a wildfire incident.
           o The largest of the three competitions--the IT infrastructure,
           which affected 1,200 FTEs--was won by the MEO. Because the MEO is
           still a unit of the Forest Service and staffed by Forest Service
           employees, the agency was able to direct the MEO to allow
           ICS-certified employees to
           volunteer to fight wildfires and respond to other emergencies by
           performing non-IT-related duties.
			  
21 See, for example, U.S. Department of Agriculture, Office of the Chief
Financial Officer, Office of Competitive Sourcing, FY07 Guidebook for
Inventories of Commercial Activities and Inherently Governmental
Activities (March 2007).

           While the Forest Service has thus far minimized the impact of A-76
           competitions on the availability of ICS-certified personnel to
           fight wildfires and respond to other emergencies, the following
           other factors may affect the availability of ICS-certified
           personnel in the future:

           o The Forest Service cannot realistically expect a private sector
           firm to provide emergency services unrelated to the activity being
           competed. For example, the Forest Service could not hold a
           competition for fleet maintenance and expect firms that specialize
           in fleet maintenance to provide unrelated services at the scene of
           the fire, such as providing food and supplies.
           o Whether an MEO or a private sector firm wins a competition, the
           availability of ICS-certified personnel could decline. As with any
           reorganization, competitive sourcing may cause some personnel to
           leave the Forest Service. These employees could retire or be hired
           by other federal agencies that participate in the NWCG, and thus
           they could continue to fight fires and respond to other
           emergencies.22 Other employees, however, may no longer be
           available if their new employment situation does not allow them to
           take extended leaves of absence to fight fires and respond to
           other emergencies.

           In its fiscal years 2006 and 2007 appropriations for the Forest
           Service, Congress required the agency, in carrying out any
           competitive sourcing competition involving Forest Service
           employees, to take into account the potential effect that
           contracting with a private sector organization would have on the
           agency's ability to fight and manage wildfires.23 For the only
           A-76 competition started since the law was passed--the
           communications competition--the 130 employees potentially affected
           by the competition were asked to report the amount of time they
           spent responding to emergencies during the previous year. However,
           the Forest Service did not collect information on what specific
           duties those employees performed during the emergency response,
           nor the ICS-qualifications they hold. Without this information,
           the Forest Service cannot assess the full impact of this
           competition on its emergency response capability.
			  
22 Retired employees who are ICS-certified are eligible to be hired on an
hourly basis to fight fires and respond to other emergencies.

23 Pub. L. No. 109-54 S 422(e), 119 Stat. 499, 554-55 (Aug. 2, 2005); and
Pub. L. No. 110-5, S 104, 121 Stat. 8, 9 (Feb. 15, 2007) (operates to
retain this requirement in fiscal year 2007). Section 422(e) states the
following: "determine whether any of the employees concerned are also
qualified to participate in wildland fire management activities; and take
into consideration the effect that contracting with a private sector
source would have on the ability of the Forest Service to effectively and
efficiently fight and manage wildfires."

           While it is important to know the impact of individual
           competitions, it is even more important to know the cumulative
           impact of multiple competitions. However, the Forest Service does
           not have a strategy to assess the cumulative impact that future
           competitions could have on its firefighting capability. The
           absence of such a strategy could prove significant if the Forest
           Service implements its plan to consider over 24,000 FTEs--or
           nearly two thirds of its workforce--for A-76 competition.
			  
			  The Forest Service Does Not Have Sufficient Competitive Sourcing
			  Cost Data to Demonstrate Compliance with Its Statutory Spending
			  Limitations or to Accurately Report Savings to Congress
			  
			  The Forest Service does not know how much it spent on competitive
           sourcing activities and, therefore, cannot be assured that it
           stayed within the spending limitations or that it accurately
           reported savings to Congress. For fiscal years 2004 through 2006,
           we found that the Forest Service (1) narrowly interpreted the
           spending limitations to exclude certain costs and (2) lacked
           sufficiently complete and reliable cost data to demonstrate its
           compliance with the appropriations acts' spending limitations on
           its competitive sourcing activities. Furthermore, Congress may not
           have an accurate measure of the savings from the Forest Service's
           A-76 competitions because the agency (1) does not have complete
           and reliable cost data and (2) did not include all costs
           associated with its competitive sourcing program.
			  
			  The Forest Service's Interpretation of Costs That Are Subject to
			  Statutory Spending Limitations Was Too Narrow

           For fiscal years 2004 through 2006, the Forest Service did not
           attempt to collect cost data on all competitive sourcing
           activities because it believed that some costs associated with
           these activities were not subject to the spending limitations of
           $5 million, $2 million, and $3 million, respectively, as
           established in its appropriations acts. Specifically, the Forest
           Service reasoned that it did not have to collect all the cost data
           because it interpreted the spending limitations as being intended
           to restrict the number of A-76 competitions it conducted. It,
           therefore, asserted that the costs associated with the competition
           stage were subject to the spending limitations, while costs
           associated with the FAIR Act inventory; precompetition planning;
           and postcompetition accountability activities should not be
           included.

           However, we found that the Forest Service's interpretation of
           which competitive sourcing activities are subject to the spending
           limitations was too narrow. Specifically, we concluded that, with
           only a limited exception, the spending limitations apply to all
           costs attributable to the Forest Service's competitive sourcing
           program, including feasibility studies and other precompetition
           planning activities, the competition itself, postcompetition
           accountability activities, and the CSPO's costs to manage the
           program. Only the costs incurred to comply with the FAIR Act, such
           as those to develop the inventories of activities, are exempt from
           the limitations because the Forest Service is statutorily required
           to perform FAIR Act-related activities even if it makes no effort
           to conduct competitive sourcing.24 (See app. II for further
           discussion on our legal interpretation.)

           In April 2007, we sought the opinion of the USDA's General Counsel
           on whether certain Forest Service competitive sourcing activities
           are subject to the annual statutory spending limitations. Our
           interpretation of the costs that were subject to the spending
           limitations for fiscal years 2004 through 2006 is consistent with
           the interpretation that USDA's General Counsel provided to us. The
           USDA's General Counsel further stated that it believed that the
           Forest Service may not have complied with the spending limitations
           in fiscal years 2004 through 2006.
			  
			  The Forest Service Did Not Ensure That Cost Data Used to Comply with
			  Statutory Spending Limitations Are Reliable

           Even when it used its own interpretation of costs subject to the
           spending limitations, the Forest Service still did not know
           whether it complied with the limitations because it did not have a
           cost accounting system sufficient to track costs related to
           competitive sourcing. First, the Forest Service failed to
           establish tracking codes, known as job codes, in its financial
           management system to enable it to distinguish cost data on the
           activities that it believed were subject to the spending
           limitations from other cost data.25 Forest Service officials could
           not explain why the agency had not established these job codes.
			  
24For fiscal year 2008, the Forest Service is prohibited from using any
fiscal year 2008 funds for "competitive sourcing studies and related
activities involving Forest Service personnel." Consolidated
Appropriations Act, 2008, Div. F, S 415(a), Pub. L. No. 110-161 (Dec. 26,
2007).

25The Forest Service uses job codes to track its competitive sourcing
program costs, which are established in its Foundation Financial
Information System. The job codes are used to track costs related to
things such as salary, travel, consultancy services, or supplies.

           Second, the Forest Service lacked guidance and management
           oversight to ensure that employees were accurately and
           consistently using the job codes that were established for
           competitive sourcing activities. In particular, Forest Service
           officials could not provide us with any guidance that employees
           could use to determine when to charge time to these job codes and
           when to charge time to codes associated with their regular duties.
           Officials acknowledged that without this guidance, employees
           probably continued to charge time spent on competitive sourcing
           activities to their regular job codes. For example:

           o In fiscal year 2004, Forest Service employees charged only 0.07
           FTEs to the job code established to track costs with the IT
           infrastructure competition, even though competitive sourcing
           activities for the competition took place throughout the entire
           fiscal year.
           o In fiscal years 2005 through 2006, Forest Service employees
           charged only 0.22 FTEs to the job code established to track costs
           associated with the communications competition, even though
           competitive sourcing activities for the competition began in
           fiscal year 2005 and were ongoing at the end of fiscal year 2006.

           In consultation with Forest Service officials, we agreed that it
           was not feasible to reconstruct cost data for competitive sourcing
           activities between fiscal years 2004 and 2006 to determine if the
           Forest Service exceeded the appropriations acts' spending
           limitations. Forest Service officials told us it would require a
           significant amount of time and resources to query employees on
           their past work activities associated with competitive sourcing.
           Furthermore, it is unlikely that employees could reliably report
           the time they spent on competitive sourcing activities that took
           place months and years ago. Finally, officials told us that many
           employees involved with the competitions have since left the
           agency.

           Recognizing these shortcomings, the Forest Service has made some
           efforts to improve its policies and guidance on how to establish
           job codes and how employees are to use them to track competitive
           sourcing costs. In fiscal year 2007, the Forest Service issued
           general policy on when to charge time to competitive sourcing job
           codes. Among other things, it issued a directive specifying that
           the cost of performing some precompetition planning activities be
           charged to competitive sourcing job codes. However, the Forest
           Service has yet to provide details on how it intends to implement
           this policy, and thus we were not able to evaluate it.
			  
			  The Forest Service Could Not Substantiate Savings Reported to Congress

           The Consolidated Appropriations Act, 2004, establishes a
           governmentwide requirement for each executive agency to report to
           Congress on the actual savings derived from the implementation of
           competitions for the prior fiscal year.26 In addition, OMB
           provides guidance on preparing the report, including how to
           calculate savings.27 According to the guidance, savings from
           completed competitions is defined as the difference between the
           cost to the federal government of performing the activity prior to
           the competition--the baseline cost--and the cost to the government
           of performing the activity or paying for it after the winner of
           the competition has begun performing the activity. This is the
           postcompetition cost. Figure 1 shows how savings from competitions
           are calculated.

Figure 1: OMB Calculation for Determining Savings from Competitions,
Fiscal Years 2004-2006

While OMB guidance specifies the postcompetition cost to the government if
a private sector contractor wins the competition, it does not provide
specific direction on how to calculate the postcompetition cost to the
government if the MEO wins the competition. Instead, the guidance suggests
determining the cost of in-house performance using a methodology similar
to that used to calculate the baseline costs.

26 Specifically, the Consolidated Appropriations Act, 2004, requires
agencies to report on "actual savings, or a quantifiable description of
improvements in service or performance, derived from the implementation of
competitions" for the previous fiscal year. Pub. L. No. 108-199, Div. F,
Title VI, S 647(b)(7), 118 Stat. 3, 361 (Jan. 23, 2004).

27 OMB provides this guidance annually. The guidance did not change
substantially for fiscal years 2004 through 2006. See footnote 4.

In its reports to Congress on the actual savings derived from the
implementation of competitions, USDA reported that the Forest Service
saved over $38 million between fiscal years 2004 through 2006 as a result
of the three completed competitions--IT infrastructure (approximately
$35.2 million), fleet maintenance (approximately $716,000), and road
maintenance (approximately $2.2 million).

For these three competitions, Forest Service officials at the agency's
headquarters and in the regions could not provide us with the information
necessary to fully substantiate the savings reported to Congress.
Headquarters officials directed us to the regions responsible for the
competitions, where officials were able to provide some cost data, but
overall could not provide us with the information necessary to
substantiate the savings reported to Congress. GAO's document entitled The
Standards for Internal Control in the Federal Government requires that all
transactions and other significant events, such as the Forest Service
competitive sourcing costs and savings analyses, be clearly documented,
and the documentation should be readily available for examination.28
Specifically, we found the following:

           o IT infrastructure. Officials could not tell us the methodology
           they used to determine postcompetition costs and did not have
           available the data they used to calculate savings. They
           reconstructed the personnel and overhead costs for operating the
           MEO, but could not reconstruct the cost of outside contractors
           that the MEO employed because these costs were not discernable
           from other cost data that the Forest Service collected.
           Ultimately, these officials could only speculate about what the
           contract costs might have been and how savings were calculated.
           o Fleet maintenance. As with the IT infrastructure competition,
           officials could not tell us the methodology they used to determine
           postcompetition costs and did not have available all of the data
           they used to calculate savings. Although officials provided us
           with the bulk of the postcompetition cost data--the payments made
           to Serco, the private sector organization that won the
           competition--they could not provide us with all of the costs.
           o Road maintenance. Unlike the other two competitions, officials
           responsible for this competition described the methodology.
           However, they were unable to provide us with baseline cost data
           for fiscal year 2004, and, as a result, we could not verify the
           reported savings for that year.
			  
28GAO, The Standards for Internal Control in the Federal Government,
[45]GAO/AIMD-00-21 .3.1 (Washington, D.C.: November 1999).

           In April 2007, OMB issued guidance to help agencies substantiate
           the savings they have achieved through A-76 competitions. The
           guidance describes agency responsibilities related to tracking and
           reviewing cost data to ensure savings are being realized. It also
           requires all agencies to develop plans to independently validate a
           sampling of competitions to confirm projected savings. Among other
           things, the guidance requires agencies to assess the completeness
           and accuracy of cost data. Forest Service officials told us that
           the agency is working to implement OMB's guidance. USDA told us
           that it is directing the Forest Service to validate the savings
           from the IT infrastructure competition by the fourth quarter of
           fiscal year 2008.
			  
			  The Forest Service Did Not Include All Costs Associated with Its
			  Competitive Sourcing Program When Calculating Savings Reported to
			  Congress

           While the Forest Service could not substantiate the savings it
           reported to Congress using OMB's guidance, the guidance itself
           allows agencies to exclude some costs associated with A-76
           competitions, which, if excluded, may not provide Congress with an
           accurate measure of the savings produced by the competitions.
           Although Forest Service officials could not tell us all of the
           costs that were included or excluded in their savings estimates,
           they stated with confidence that some costs were excluded.
           Specifically, they said that transition costs associated with
           transferring responsibilities to the winning organization were not
           included in the savings calculations for the three competitions we
           reviewed. Transition costs include costs associated with
           decreasing the size of the workforce through buyouts and
           retirements, and costs to transfer employees who are being
           retained to other locations. These are not necessarily one-time
           costs because an agency is required to complete a follow-on
           competition for an activity, generally after about 3 to 5 years.
           In the three competitions we reviewed, we found the following
           transition costs were excluded:

           o IT infrastructure. Forest Service officials told us that they
           excluded approximately $40 million in transition costs from the
           savings calculations that were reported to Congress.29 These costs
           exceeded by about $5 million the $35.2 million that the Forest
           Service reported to have saved during fiscal years 2005 and 2006
           as a result of the competition.
           o Fleet maintenance. Forest Service officials told us they
           excluded about $670,000 in transition costs from the savings
           calculations that were reported to Congress, nearly equaling the
           approximately $716,000 that the Forest Service reported to have
           saved since fiscal year 2005 as a result of the competition.
           o Road maintenance. Forest Service officials told us they excluded
           about $320,000 in transition costs from the savings calculations
           that were reported to Congress. These costs are approximately 15
           percent of the total $2.2 million in reported savings since fiscal
           year 2004.

           In addition to transition costs, there are also precompetition
           planning costs (including, as of May 2004, feasibility study
           costs). Like transition costs, OMB guidance does not direct that
           precompetition planning costs be included in the savings
           calculations. A Forest Service official told us that
           precompetition planning costs were excluded from the savings
           calculations for the three completed competitions. Forest Service
           officials could not provide us with estimates of these costs
           because they were not tracked.

           OMB guidance also does not direct agencies to include in their
           savings calculation other potential costs associated with the
           termination of a contract. To illustrate, 14 months after the
           private sector contractor, Serco, began performing fleet
           maintenance activities, the Forest Service terminated the
           contract. Under the terms of the contract, the Forest Service must
           negotiate with Serco on any costs associated with the termination
           itself. Forest Service officials stated that in March 2007, Serco
           proposed a settlement amount that it contends would reimburse it
           for costs such as those associated with vacating sites as well as
           administrative costs and attorneys' fees. Serco also contends that
           the Forest Service owes it additional compensation unrelated to
           the contract termination. Serco's claim stems from a disagreement
           with the Forest Service over the terms of the contract. Finally,
           Forest Service officials also told us that the agency has incurred
           additional costs--exceeding its costs for fleet maintenance before
           the Serco contract--because maintenance work is now being
           performed by retail venders. Officials told us that the Forest
           Service is precluded from returning the work to the agency for
           in-house performance.30 Because these issues are still pending, we
           did not include the dollar amounts of Serco's claims or the
           additional costs incurred by the Forest Service, and the Forest
           Service officials told us that they did not want to comment
           further on this issue.
			  
29The Forest Service reported that the savings accrued over a 20-month
period between February 2005 and September 2006.

           Conclusions
	
           The government's goal is to obtain high-quality services at a
           reasonable cost, regardless of whether these services are
           performed by the public or private sector. Competition between the
           public and private sectors is an important tool in reaching this
           goal. The 2001 President's Management Agenda has reemphasized the
           importance of using this tool as a means to deliver the best value
           to the American taxpayer.

           In keeping with the President's Management Agenda, the Forest
           Service established a competitive sourcing program and began
           holding A-76 competitions. The agency now has plans to consider
           competing up to two thirds of its workforce against the private
           sector. This is a massive undertaking whose long-term success will
           depend on a realistic strategic plan, clear guidance to identify
           the key work activities that should be excluded from competition,
           and a strategy to assess the cumulative effect that outsourcing a
           large number of federal jobs could have on its firefighting
           capability. Unfortunately, the Forest Service has none of these in
           place. Because the Forest Service has just begun to implement its
           competitive sourcing program--having competed less than 5 percent
           of its workforce against the private sector--these problems have
           not yet had a significant impact on the Forest Service's
           competitive sourcing program. However, as the Forest Service
           implements its Green Plan and greatly expands the scope of its
           competitive sourcing program, the problems we have identified
           could, in the long term, severely impact its ability to implement
           this program effectively--jeopardizing not just the overall
           success of the program, but the nation's ability to fight fires
           and respond to other emergencies.

           More immediate is our concern that the Forest Service did not
           collect complete and reliable cost data related to its competitive
           sourcing program during fiscal years 2004 through 2006. As a
           result, the agency did not know how much it had spent on
           competitive sourcing activities and, consequently, whether it had
           complied with statutory spending limitations. We are also
           concerned about the usefulness of the cost savings that the Forest
           Service reported to Congress. The Forest Service could not provide
           us with sufficient data to verify the accuracy of the reported
           savings and excluded substantial costs from the savings
           calculations. Although the agency followed OMB guidance in
           calculating savings, we believe the guidance provides the Forest
           Service with the latitude to include the other costs we
           identified--some of which were substantial. Including these costs
           would have provided Congress with a more realistic picture of the
           extent to which the Forest Service's competitive sourcing program
           is saving the American taxpayers' money.
			  
30According to the circular, work performed by a commercial source cannot
automatically revert to government (in-house) performance. Specifically,
before the government may perform the work currently being performed by
the private sector, an A-76 competition must be used to determine whether
the government should perform the activity.

           Recommendations for Executive Action

           To improve the Forest Service's management of its competitive
           sourcing program, we recommend that the Secretary of Agriculture
           direct the Chief of the Forest Service to take the following five
           actions:

           o Revise the Green Plan to establish an implementation schedule
           that takes into account resource limitations.
           o Develop clear guidance on when and how to identify inherently
           governmental and core-commercial activities so they are excluded
           from competitive sourcing competitions.
           o Develop a strategy for assessing the cumulative effect of
           competitive sourcing competitions on the Forest Service's
           firefighting and emergency response capabilities.
           o Collect complete and reliable cost data on competitive sourcing
           activities to ensure that the Forest Service is able to comply
           with the appropriations acts' spending limitations.
           o Ensure that the savings reported to Congress are a realistic
           measure of the actual savings resulting from A-76 competitions by
           (1) verifying the accuracy of the data and (2) including costs
           such as planning costs and transition costs when calculating the
           savings.
			  
			  Agency Comments

           We provided a draft of this report to the U.S. Department of
           Agriculture for review and comment. The Forest Service responded.
           It generally agreed with our recommendations but had concerns
           about some of the specific findings and conclusions in the report.
           We present the agency's concerns and our responses to them in
           appendix III.

           As agreed with your offices, unless you publicly announce the
           contents of this report earlier, we plan no further distribution
           for 30 days from the report date. At that time, we will send
           copies of this report to interested congressional committees, the
           Secretary of Agriculture, and the Chief of the Forest Service. We
           will also make copies available to others upon request. In
           addition, the report will be available at no charge on the GAO Web
           site at http://www.gao.gov.

           If you or your staffs have any questions about this report, please
           contact me at (202) 512-3841 or [37][email protected] . Contact
           points for our Offices of Congressional Relations and Public
           Affairs may be found on the last page of this report. GAO staff
           who made major contributions to this report are listed in appendix
           IV.

           Robin M. Nazzaro
			  Director, Natural Resources and Environment

           List of Requesters

The Honorable Jeff Bingaman: 
Chairman: 
Committee on Energy and Natural Resources: 
United States Senate: 

The Honorable Dianne Feinstein: 
Chairwoman: 
Subcommittee on Interior, Environment, and Related Agencies: 
Committee on Appropriations: 
United States Senate: 

The Honorable Byron L. Dorgan: 
United States Senate: 

The Honorable Russ Feingold: 
United States Senate: 

The Honorable Herb Kohl: 
United States Senate: 

           Appendix I: Objectives, Scope, and Methodology

           This report discusses the extent to which the U.S. Department of
           Agriculture's (USDA) Forest Service has (1) plans and guidance to
           help implement its competitive sourcing program effectively and
           (2) sufficient cost data to ensure that it complied with its
           competitive sourcing statutory spending limitations and accurately
           reported its competitive sourcing savings to Congress for fiscal
           years 2004 through 2006.

           To address these two objectives, we focused on Forest Service
           competitive sourcing activities between fiscal years 2004 and
           2006. For the first objective, we compared the Forest Service's
           Green Plan, including draft versions of the plan, with previous
           work that GAO has performed that identified the elements of
           effective strategic plans. We also reviewed the guidance that the
           Office of Management and Budget (OMB) and USDA provided to the
           Forest Service on how to construct its Green Plan. Furthermore, we
           examined how the Forest Service scoped the three competitions that
           it completed during this time frame. Specifically, we examined how
           the Forest Service ensured that it did not include inherently
           governmental and core-commercial activities in the competitions,
           and how it assessed the impact that competitions could have on the
           nation's ability to fight wildland fires and respond to other
           emergencies. Finally, we examined the guidance currently available
           to Forest Service employees responsible for scoping competitive
           sourcing competitions and interviewed Forest Service officials
           familiar with the agency's competitive sourcing activities.

           To respond to the second objective, we examined the appropriations
           acts for fiscal years 2004 through 2006 to determine which costs
           incurred by the Forest Service during those fiscal years were
           subject to the spending limitations. Appendix II explains this
           analysis in greater detail. We then asked the Forest Service to
           provide us with cost data for activities associated with its
           competitive sourcing program, including cost data we had
           determined were subject to the spending limitations. We assessed
           the reliability of these data and found them unreliable as a
           measure of the costs and savings associated with the program.
           Specifically, our review of cost data from the USDA's Federal
           Financial Information System (FFIS) and subsequent discussions
           with Forest Service officials, including the Chief Financial
           Officer, confirmed that the Forest Service had not issued formal
           guidance on which costs where to be charged to competitive
           sourcing job codes in FFIS, and that there was a lack of
           institutionalized policies and procedures to guide employees in
           tracking the time and costs associated with competitive sourcing
           activities. As a result, Forest Service officials, including the
           Chief Financial Officer, agreed that it was likely that employees
           used job codes inconsistently and that the accounting of
           competitive sourcing expenditures between fiscal years 2004 and
           2006 were unreliable and inaccurate. We also asked the Forest
           Service for data to substantiate the annual savings resulting from
           competitive sourcing competitions it reported to Congress in
           fiscal years 2004 through 2006. For the three competitions
           completed during this time frame, Forest Service officials either
           could not provide us with the methodology used to calculate the
           savings, or could not provide us with all of the data used to
           calculate the savings. As a result, we were unable to replicate
           the Forest Service's savings calculations, and thus we determined
           the reported numbers were unreliable because data reporting
           strategies were absent or inconsistent, there were no internal
           processes for verifying the accuracy of the data, and there was no
           documentation with which we could verify the accuracy of the data.
           Finally, in the course of our work, we identified categories of
           costs that were not included in the Forest Service's savings
           calculations. We include examples of these costs in this report to
           show their magnitude relative to the savings reported to Congress;
           however, we did not independently verify the accuracy of these
           costs. We conducted our work between October 2006 and January 2008
           in accordance with generally accepted government auditing
           standards.
			  
			  Appendix II: Limitations on Use of Appropriations for "Competitive
			  Sourcing Studies and Related Activities"

           The Forest Service relies on both federal employees and private
           contractors to perform commercial activities--activities performed
           by the government that are also regularly performed in the
           commercial market place--such as data entry, photocopying, and
           other administrative support services. To determine whether to
           convert the performance of such activities from federal employees
           to private contractors, or vice versa, the Forest Service follows
           the competitive process set out in Office of Management and Budget
           (OMB) Circular No. A-76, Performance of Commercial Activities (May
           29, 2003), as revised, which establishes executive branch policy
           for the competition of commercial activities.1 The Forest Service
           is also subject to the requirements of the Federal Activities
           Inventory Reform Act of 1998 (FAIR Act),2 which mandates agencies
           to develop inventories of their activities, and the President's
           Management Agenda (PMA), launched in 2001, which includes a
           governmentwide "competitive sourcing" initiative to increase and
           to make more efficient and effective agencies' use of the
           circular's competitive process.3 To implement these requirements,
           the Forest Service established a competitive sourcing program that
           is administered by the Competitive Sourcing Program Office.4

           A provision in each of the annual appropriations acts funding the
           Forest Service for fiscal years 2004 through 2006 limited the
           amount of appropriated funds available to the Forest Service for
           "competitive sourcing studies and related activities" to between
           $2 million and $5 million (spending limitations). Five members of
           the U. S. Senate requested that we determine which costs incurred
           by the Forest Service in fiscal years 2004 through 2006 were
           subject to the spending limitations. In our view, these spending
           limitations apply to all costs under the Forest Service's
           competitive sourcing program, except for costs incurred to carry
           out the FAIR Act.
			  
1 OMB Circular No. A-76 may be accessed at
www.whitehouse.gov/omb/circulars/index.html  (last visited Oct. 22, 2007).

2 Pub. L. No. 105-270, 112 Stat. 2382 (Oct. 19, 1998).

3 Executive Office of the President and OMB, The President's Management
Agenda (2001), available at www.whitehouse.gov/results/agenda/index.html 
(last visited Sept. 6, 2007).

4 USDA-Forest Service, Report to Surveys and Investigations Staff,
Committee on Appropriations, U.S. House of Representatives, Implementation
of the Competitive Sourcing Initiative at the U.S. Forest Service, at i,
3, 4, 9 (Mar. 2004).

           Background

           OMB Circular No. A-76 includes, in appendix B, detailed guidance
           on the competitive process a federal agency should follow to
           determine whether an activity should be performed by a public or
           private source.5 The process is divided into three stages: (1) a
           precompetition preliminary planning stage, consisting, at minimum,
           of nine specified steps; (2) a competition stage that starts with
           a formal public announcement of a standard or streamlined
           competition6 between private and public sources and ends with
           announcing a performance decision; and (3) a postcompetition
           accountability stage, which mandates such actions as transferring
           performance of the activities to the winning entity, maintaining a
           database to track the execution of competitions, monitoring
           performance, and submitting reports to OMB. To avoid the mistakes
           it made during earlier competitions, the Forest Service has
           supplemented this process since 2004 by first conducting studies
           to determine the feasibility of carrying out this competitive
           process (feasibility studies) for each activity.7 In 1998,
           Congress enacted the FAIR Act, which requires federal agencies to
           submit to OMB their annual inventories of commercial activities
           and, after a period of review and consultation with OMB, transmit
           the final inventories to Congress and make them available to the
           public. Appendix A to OMB Circular No. A-76 (Inventory Process)
           implements the FAIR Act.

           In August 2001, the Administration launched the PMA as its reform
           agenda for improving management and performance in the federal
           government. The PMA includes a competitive sourcing initiative to
           simplify and improve the process for choosing private or public
           sources. To implement the PMA competitive sourcing initiative, the
           Forest Service stated in its fiscal year 2004 budget justification
           that it planned to conduct competitions for activities associated
           with a total of 11,000 full-time employees or their equivalent
           (FTEs), and that competitive sourcing costs were expected to
           rise.8 Concerned about how the Forest Service had implemented the
           PMA competitive sourcing initiative,9 the House and Senate
           appropriations committees included language in the appropriations
           bills for fiscal year 2004 that led to the enactment of the
           following spending limitation: "Of the funds appropriated by this
           Act, not more than $5,000,000 may be used in fiscal year 2004 for
           competitive sourcing studies and related activities by the Forest
           Service."10 The Forest Service's appropriations acts for fiscal
           years 2005 and 2006 included spending limitations with identical
           language, except that the maximum amount available for this
           purpose was $2 million and $3 million, respectively.11 At issue
           here is determining the range of Forest Service activities that
           are covered by the appropriations acts' spending limitations on
           "competitive sourcing studies and related activities."
			  
5 The circular was first issued in 1966 and last revised in 2003. See OMB
Cir. No. A-76, P 4 (June 14, 1999), P 2 (May 29, 2003).

6 When 65 or fewer full-time employees or its equivalent (FTEs) are
required to perform the commercial activity being evaluated, OMB Circular
No. A-76 permits a federal agency to perform a streamlined competition,
which is faster and less costly to conduct than a standard (i.e., regular)
competition because of the abbreviated and less complex procedures
required. Under older versions of the circular, the "competition" held
under stage two was called a "cost comparison." See OMB Cir. No. A-76, P
7; app. D at D-3 (definition for "competition").

7 USDA OCFO, Guidance for Determining the Feasibility of Conducting
Competitive Sourcing Competitions, Bulletin 2004-001 (May 11, 2004). The
bulletin lists 13 categories of information that are needed to make this
determination, such as Business Needs Assessment, Market Research,
Cost/Benefit Analysis, Acquisition Strategy, and Requirements.

           Discussion

           Construing the meaning of a statutory provision starts with the
           statutory language.12 The appropriations acts for fiscal years
           2004 through 2006 define a "competitive sourcing study" for
           purposes of the spending limitations as

           "a study on subjecting work performed by Federal Government
           employees or private contractors to public-private competition or
           on converting the Federal Government employees or the work
           performed by such employees to private contractor performance
           under the Office of Management and Budget Circular A-76 or any
           other administrative regulation, directive, or policy."13
			  
8 USDA Forest Service-FY 2004 Budget Justification, at 1-6 (Feb. 3, 2003),
available at [46]www.fs.fed.us/aboutus/budget/ (last visited Oct. 22,
2007).

9 H.R. Rep. No. 108-195, at 107 (2003); S. Rep. No. 108-89, at 8 (2003).

10 Department of the Interior and Related Agencies Appropriations Act,
2004, Pub. L. No. 108-108, S 340(d)(3), 117 Stat. 1241, 1316 (Nov. 10,
2003).

11 Department of the Interior and Related Agencies Appropriations Act,
2005, Pub. L. No. 108-447, div. E, S 332(a)(3), 118 Stat. 2809, 3100 (Dec.
8, 2004); Department of the Interior, Environment, and Related Agencies
Appropriations Act, 2006, Pub. L. No. 109-54, S 422(a)(2), 119 Stat. 499,
554 (Aug. 2, 2005).

12 As the U.S. Supreme Court has stated: "There is, of course, no more
persuasive evidence of the purpose of a statute than the words by which
the legislature undertook to give expression to its wishes." United States
v. American Trucking Associations, Inc., 310 U.S. 534, 543 (1940); see
Mallard v. U.S. District Court, 490 U.S. 296, 300-02 (1989); B-302973,
Oct. 6, 2004; B-288173, June 13, 2002.

13 Pub. L. No. 108-108, S 340(f); Pub. L. No. 108-447, S 332(b); Pub. L.
No. 109-54, S 422(b).

           Unfortunately, by defining a "competitive sourcing study" as a
           "study," albeit in the context of private versus public source
           performance,14 the appropriations acts do not clearly indicate the
           breadth of Forest Service activities that fall within its
           meaning.15 At the very minimum, however, the phrase includes the
           competition stage (the second stage) of the OMB Circular No. A-76
           process because it represents the formal structured process of
           soliciting and evaluating proposals from public and private
           sources. The Forest Service takes the position that the annual
           spending limitations apply only to costs attributable to the
           competition stage.16 We disagree, as does the U. S. Department of
           Agriculture's General Counsel, who provides legal assistance to
           the Forest Service.17 Even if we were to read the word "study" as
           narrowly as the Forest Service apparently does, the additional
           words "and related activities" in this context make clear that the
           statutory language includes more than simply the competitions.

14 The term "competitive sourcing" originated with the Department of
Defense in the late 1990s. GAO, DOD Competitive Sourcing: Results of
Recent Competitions, [47]GAO/NSIAD-99-44 (Washington, D.C.: Feb. 23,
1999), at 2. Its use in connection with the spending limitations, however,
appears to have its origins in the 2001 PMA. Prior to 2001, the term
"competitive sourcing" does not appear within the commercial activities
executive guidance, such as the 1999 version of OMB Circular No. A-76, or
statutes, such as the FAIR Act. However, the term appears in related
executive guidance and statutes after the launch of the PMA, such as the
2003 version of OMB Circular No. A-76 (e.g., "competitive sourcing
quarterly reports" and "competitive sourcing officials") and the
Consolidated Appropriations Act, 2004, Pub. L. No. 108-199, S 647(b), 118
Stat. 3, 361 (Jan. 23, 2004) (e.g., "report on the competitive sourcing
activities" of the agency).

15 For example, in the context of OMB Circular No. A-76, a study could
reasonably include or exclude the postcompetition stage activities, such
as performance monitoring and reporting. In this regard, the circular
appears to include them in its description of the competitive sourcing
process. See OMB Cir. No. A-76, app. B, fig. B1, at B-4; fig. B2, at B-6.
On the other hand, the spending limitations' statutory definition of a
"competitive sourcing study" is similar to the definition of a
"competition" under the current version of OMB Circular No. A-76, or a
"cost comparison" under older versions. The current version of OMB
Circular No. A-76 defines a "competition" as a "formal evaluation of
sources to provide a commercial activity that uses pre-established rules
(e.g., the FAR, this circular) . . . includ[ing] streamlined and standard
competitions performed in accordance with this circular." The supplement
to the 1999 version of OMB Circular No. A-76 defined a "cost comparison"
for the "activity under study" as "the process whereby the estimated cost
of Government performance of a commercial activity is formally compared,
in accordance with the principles and procedures of this Circular and
Supplement, to the cost of performance by commercial or ISSA [interservice
support agreement] sources."

16 Memorandum from Chief Dale N. Bosworth, Forest Service, to Charles
Christopherson, CFO, USDA, Revised USDA Forest Service Competitive
Sourcing "Green Plan": FY 2005-2009, Dec. 23, 2005; Letter from L.
Benjamin Young, Jr., Assistant General Counsel, USDA, to F. Abe Dymond,
Assistant General Counsel, GAO, June 14, 2007 (Young Letter).

17 Young Letter at 3. Because the Forest Service, a USDA agency, receives
legal assistance from the USDA Office of General Counsel (OGC), we
solicited the General Counsel's legal views.

           The statutes do not define "related activities" or set out
           specific criteria for identifying them. While a broad range of
           activities are "related," in the sense of having some logical
           connection to competitive sourcing studies, we believe Congress
           intended to focus on those activities that the Forest Service
           performs as part of its implementation of the President's
           competitive sourcing initiative.18 In other words, "related
           activities" are those activities the Forest Service performs if it
           is considering whether to conduct a public-private competition.
           Under the Forest Service's competitive sourcing program, no
           competition is conducted until the completion of a feasibility
           study, the objective of which is to evaluate whether an activity
           should be subject to the A-76 competitive sourcing process.
           Likewise, no competition is conducted under OMB Circular No. A-76
           until the completion of the precompetition stage (the first
           stage), which also includes tasks such as conducting market
           research and developing an acquisition plan. Feasibility studies
           and precompetition planning activities are thus prerequisites to a
           competition and, therefore, in our view, "related activities."
           Similarly, the postcompetition stage is a required consequence of
           conducting a competition. The Forest Service's Competitive
           Sourcing Program Office supports and manages these and other
           activities in the Forest Service's competitive sourcing program.
           Because these activities further the Forest Service's objective of
           conducting competitions under the competitive sourcing initiative,
           we view them as "related activities" subject to the spending
           limitation.

18 For example, in 2004 the House committee noted its concern about how the
Forest Service had implemented the competitive sourcing "initiative"
because it "has looked into this issue in detail and found a number of
cases of mismanagement of this effort" and thus addressed "this issue" in
bill language by "limiting the use of funds for competitive sourcing
efforts." H.R. Rep. No. 108-542, at 111 (2004). The fiscal year 2004
conference committee report stated that the committee was concerned about
the failure to budget adequately for the cost of implementing the
competitive sourcing initiative and that "significant sums" were being
expended on the competitive sourcing initiative "at the expense of
critical, on-the-ground work." H.R. Conf. Rep. No. 108-330, at 85-86
(2003); see also H.R. Rep. No. 108-195, at 8-10.			  

           While it can be argued that the words "and related activities"
           include activities the Forest Service performs to carry out the
           FAIR Act, such as preparing inventories and reporting to Congress,
           we think the better view is that these costs are not encompassed
           in this limitation. Congress by law expressly requires these
           activities, even absent any other competitive sourcing program
           activities. Moreover, complying with the FAIR Act does not further
           the Forest Service's progress on the PMA competitive sourcing
           initiative, and it was the Forest Service's cost to implement this
           initiative to which the congressional committees were reacting.19
           Our interpretation is consistent with the interpretation provided
           to us by the USDA Office of General Counsel.20
			  
			  Conclusion

           Accordingly, we conclude that the spending limitations on
           "competitive sourcing studies and related activities" included in
           the appropriations acts funding the Forest Service for fiscal
           years 2004 through 2006 apply to all costs attributable to the
           Forest Service's competitive sourcing program, including the
           following:

           o conducting feasibility studies to evaluate which activities
           should be subject to the competitive sourcing process set out in
           OMB Circular No. A-76;
           o engaging in the competitive sourcing process set out in OMB
           Circular No. A-76, including activities related to precompetition
           planning, competitions between sources, and postcompetition
           accountability; and
           o managing the agency's competitive sourcing program.

           The appropriations acts spending limitations, however, do not
           apply to costs incurred for complying with the FAIR Act, which the
           Forest Service must do even if it applies no efforts to
           competitive sourcing.
			  
19 H.R. Rep. No. 108-195, at 8-10, 107. According to information the Forest
Service provided to GAO, the cost of complying with the FAIR Act is
negligible compared to the costs of conducting the other activities
associated with the competitive sourcing program.

20 According to the USDA OGC, the spending limitations do not apply to
activities required by the FAIR Act but do apply to competitions,
postcompetition accountability activities, and "all activities leading up
to a determination of whether a competition of a commercial activity
identified by a FAIR Act inventory should be conducted." Young Letter at
3.

           Appendix III: Comments from the Forest Service

Note: GAO comments supplementing those in the report text appear at the 
end of this appendix. 

United States Department of Agriculture:
"Caring for the Land and Serving People" 
Forest Service: 
Washington Office: 
1400 Independence Avenue, SW: 
Washington, DC 20250: 
		
File Code: 1310-1/1420: 

Date: December 31, 2007: 

Robin Nazzaro: 
Director, Natural Resources and Environment: 
Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Ms. Nazzaro: 

Thank you for the opportunity to review and comment on the draft 
Government Accountability Office report GAO-08-195, "Forest Service: 
Better Planning, Guidance, and Data Needed to Improve Management of the 
Competitive Sourcing Program". 

Although we have some concerns about some of the specific findings and 
conclusions in the report, the Forest Service generally agrees with the 
GAO recommendations. See the enclosure to this letter for specific 
Forest Service comments on the draft report. 

The Forest Service appreciates this opportunity to comment on the draft 
report. If you have any questions, please contact Ronald Ketter, 
Director of Strategic Planning and Performance Accountability at 202-
401-4470. 

Sincerely, 

Signed by: 

Abigail R. Kimbell:
Chief: 

Enclosure: 

cc: Ronald Ketter, Jacqueline Myers, Clarice Wesley, Robert Rinaldi: 

Forest Service Comments On Gao-08-195: 

Forest Service: Better Planning, Guidance, and Data Needed to Improve 
Management of the Competitive Sourcing Program: 

The Forest Service response to the draft report, provided below, is 
grouped under general categories to which agency comments relate. 

1) Forest Service Guidance and Strategy for Planning and Conducting 
Competitive Sourcing Studies: 

The GAO report states that the Forest Service lacks guidance to ensure 
that key work activities are excluded from A-76 competitions, and it 
lacks a strategy to assess the cumulative effect that A-76 competitions 
could have on its ability to respond to wildland fires and other 
emergencies. The report suggests that the agency may be at risk of 
subjecting inherently governmental or core commercial activities to 
competition. [See comment 1] 

Although the Forest Service agrees with the GAO recommendations, it 
does not concur with this finding. The Forest Service believes its 
current process offers sufficient safeguards to avoid these risks. The 
Forest Service FAIR Act Inventory, which forms the basis for 
identifying commercial activities for future feasibility study, 
excludes inherently governmental positions from study. The feasibility 
study process further identifies whether a public-private competition 
of certain functions or activities is feasible. The Chief of the Forest 
Service must approve its recommendations before any competition can be 
considered further. Finally, should the Forest Service proceed to a 
public-private competition, a senior management team prepares a 
performance work statement for a competition that describes the 
specific work to be performed. The Forest Service believes that these 
various steps offer sufficient safeguards to prevent inadvertently 
subjecting inherently governmental or core commercial activities to 
competition. 

The agency acknowledges that it lacks an overall strategy to assess the 
cumulative effect that A-76 competitions could have on its incident 
response capability, but it does consider and address potential effects 
on a study by study basis. 

2) Forest Service Ability to Report Costs and Savings: 

While the Forest Service recognizes its need to improve documentation 
for competitive sourcing costs and savings, it is concerned with 
several statements in the GAO report related to this topic. The Forest 
Service is committed to following government-wide directions for 
providing reliable data on competitive sourcing costs and savings to 
Congress. The GAO report raises concerns that certain costs were not 
included, but these concerns may be in conflict with current OMB 
guidance on what costs should and should not be included in these 
reports. The Forest Service believes that it complied with OMB guidance 
on whether to include certain costs such as the costs of planning, 
phase-in, or transition. We also are concerned over differing direction 
related to whether incremental or full costs of studies should be 
reported. [See comment 2] 

Costs related to termination of the Serco contract are still being 
negotiated. Due to the ongoing negotiations, the Forest Service 
believes discussion of this topic in the report should not include
mention of additional costs incurred, amounts of contract claims, or 
proposed settlement amounts. Upon completion of all negotiations, 
consideration will be given to the appropriateness of including any of 
these costs in savings calculations. [See comment 3] 

3) Forest Service Compliance with Legislative Spending Limitations: 

The GAO report states that the Forest Service interpreted the 
legislative spending limitation too narrowly. While the Forest Service 
interpreted feasibility studies as outside the spending limitation, the 
total amount it budgeted for competitive sourcing and feasibility 
studies during this period did not exceed the total spending 
limitation. Therefore, it does not believe that it exceeded the 
spending limitation, even under the broader interpretation. [See 
comment 4] 

Although cost data prior to fiscal year 2007 was less reliable, there 
was so little competitive sourcing activity during 2004 to 2006 that 
the agency firmly believes it did not violate the respective 
appropriation caps for these fiscal years. A system of project specific 
job codes was instituted in FY 2007 and full costs were tracked for all 
studies, including feasibility studies. 

This series of job codes has been further refined for the purposes of 
more accurately obtaining those CS costs which should be applied 
against the spending limitation which we believe should include support 
for the post competition accountability review and independent 
validation processes. Cost tracking excludes only the FAIR Act 
Inventory workload. 

[End of enclosure] 

The following are GAO's comments on the Chief of the Forest Service 
letter dated December 31, 2007. 

GAO Comments: 

1. We believe that the Forest Service's comments misstate our position 
regarding its guidance for ensuring that key work activities are 
excluded from A-76 competitions. Our report does not state that the 
Forest Service has no guidance, but rather that it lacks clear 
guidance. Without clear guidance, we do not believe that the Forest 
Service's current process can offer sufficient safeguards to ensure 
that key work activities are excluded from A-76 competitions, 
especially in light of the agency's plan to examine the activities of 
two thirds of its workforce. For example, regarding the FAIR Act 
inventory, we found significant fluctuations in the percentages of 
inherently governmental activities in the inventory data for fiscal 
years 2004 through 2006, suggesting that the Forest Service had 
difficulty classifying positions when preparing the inventory. In 
addition, Forest Service officials told us that the inventory data 
represents only a "rough snapshot" of the inherently governmental and 
core-commercial activities within the Forest Service, and that much 
additional work must be done to identify specifics activities suitable 
for competitions. Finally, the Forest Service officials responsible for 
the three completed competitions--IT infrastructure, road maintenance, 
and fleet maintenance--told us that they developed their own 
methodologies to classify inherently governmental and core-commercial 
activities because they did not find the agency's FAIR Act inventory 
data useful and received little guidance on how to identity inherently 
governmental and core-commercial activities. Nevertheless, these 
officials were confident that they successfully identified and exempted 
from competition inherently governmental and core-commercial activities 
because of, among other reasons, the clearly commercial nature of the 
activities. However, the three completed competitions may not be 
representative of future competitions, particularly if the Forest 
Service proceeds with its plan to examine the work activity of two 
thirds of its workforce. 

2. As we state in our report, OMB guidance on how to calculate 
competitive sourcing savings reported to Congress does not specify all 
of the costs that should be included in the calculations, thus 
providing the Forest Service with some discretion on which costs to 
include. Although the Forest Service followed OMB guidance in 
calculating savings, we believe the guidance provides the Forest 
Service with the latitude to include the other costs we identified-- 
some of which substantially reduce or even exceed the savings reported 
to Congress. Including these costs would have provided Congress with a 
more realistic picture of the extent to which the Forest Service's 
competitive sourcing program is saving the American taxpayers' money. 

3. At the Forest Service's request, we excluded from our report much of 
the information we received related to termination of the Serco 
contract because negotiations between the Forest Service and Serco are 
ongoing. However, excluding all mention of the types of possible 
additional costs would provide the false impression that the savings 
already reported to Congress resulting from the fleet maintenance 
competition have been realized, when in fact they are being called into 
question. 

4. Although the Forest Service does not believe it exceeded the 
spending limitations, even under the broader interpretation, we found 
that it does not have the data to substantiate this claim. 
Specifically, as we state in our report, the Forest Service did not 
collect complete and reliable cost data related to its competitive 
sourcing program during fiscal years 2004 through 2006 because it did 
not have a cost accounting system sufficient to track costs related to 
competitive sourcing. Furthermore, in consultation with Forest Service 
officials, we agreed that it was not feasible to reconstruct cost data 
for competitive sourcing activities for these years because doing so 
would require a significant amount of resources and would not likely 
provide reliable data. Because the Forest Service was unable to provide 
us with complete and reliable cost data and it was not feasible to 
reconstruct the data, neither the Forest Service nor GAO can determine 
with an appropriate degree of certainty if the Forest Service exceeded 
the appropriations acts' spending limitations. 

In addition, we acknowledge in our report that the Forest Service has 
made efforts to improve its policies and guidance on how to establish 
job codes and how employees are to use them for tracking purposes, 
including a directive specifying that the cost of performing some 
precompetition planning activities be charged to competitive sourcing 
job codes. 

           Appendix IV: GAO Contact and Staff Acknowledgments
			  
			  GAO Contact

           Robin Nazzaro, (202) 512-3841 or [38][email protected]
			  
			  Staff Acknowledgments

           In addition to the individual named above, Andrea Wamstad Brown,
           Assistant Director; F. Abe Dymond; Charles T. Egan; Lauren S.
           Fassler; Peter Grinnell; David Perkins; Aaron Jay Shiffrin; and
           Carol Herrnstadt Shulman made key contributions to this report.
			  
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(360746)

To view the full product, including the scope
and methodology, click on [48]GAO-08-195 .

For more information, contact Robin M. Nazzaro at (202) 512-3841 or
[email protected].

Highlights of [49]GAO-08-195 , a report to congressional requesters

January 2008

FOREST SERVICE

Better Planning, Guidance, and Data Are Needed to Improve Management of
the Competitive Sourcing Program

Competitive sourcing is aimed at promoting competition between federal
employees and the private sector as a way to improve government
operations. Key work activities--those that are either inherently
governmental or core to the agency's mission--are generally exempt from
competitions. In fiscal year 2004, Congress began placing spending
limitations on the Forest Service's competitive sourcing program because
of concerns about how the program was managed. Also, like other agencies,
the Forest Service must report annually to Congress on the savings
achieved from any competitions it conducted.

GAO was asked to determine the extent to which the Forest Service has (1)
plans and guidance to help implement its competitive sourcing program
effectively and

(2) sufficient cost data to ensure that it complied with its spending
limitations and accurately reported its savings to Congress for fiscal
years 2004 through 2006. To answer these objectives, GAO examined the
agency's strategic plan, guidance, and available cost data for competitive
sourcing and interviewed key agency officials.

[50]What GAO Recommends

GAO is recommending that the Secretary of Agriculture direct the Chief of
the Forest Service to take certain management steps to improve its
competitive sourcing program. In commenting on a draft of this report, the
Forest Service generally agreed with GAO's recommendations.

The U.S. Department of Agriculture's Forest Service lacks a realistic
strategic plan and adequate guidance to help ensure that it can
effectivelyimplement its competitive sourcing program. For example, the
Forest Service's current strategic plan is unrealistic because it does not
take into account the likely availability of personnel and funding
resources needed to implement the plan. Furthermore, the Forest Service
lacks sufficient guidance on identifying key work activities that should
be excluded from competitions. Although Forest Service officials do not
believe that inappropriate work activities have been included in
competitions that it has held, without clear guidance the Forest Service
remains at risk of doing so. The agency also lacks a strategy on how to
assess the cumulative effect that competitions could have on its ability
to fight wildland fires and respond to other emergencies. Outsourcing a
large number of federal jobs to the private sector could, over time,
reduce the number of available responders.

For fiscal years 2004 through 2006, the Forest Service lacked sufficiently
complete and reliable cost data to (1) demonstrate its compliance with
statutory spending limitations on its competitive sourcing activities and

(2) accurately report competitive sourcing savings to Congress. Regarding
compliance with spending limitations, the Forest Service did not collect
cost data on all activities related to competitive sourcing because it
believed that some costs were not subject to the limitations. For example,
the Forest Service did not collect data on employees' salaries related to
studying the feasibility of conducting a competition--a key component of
its competitive sourcing process. GAO has interpreted the statutory
spending limitations to generally apply to all costs attributable to the
Forest Service's competitive sourcing program. Moreover, because the
Forest Service's cost data used to determine compliance with statutory
spending limitations were not reliable, the Forest Service cannot know if
it exceeded the limitations. Regarding the savings achieved from its
competitions, the Forest Service reported to Congress a savings totaling
over $38 million between fiscal years 2004 and 2006. However, the Forest
Service could not provide GAO with sufficient data or the methodology it
used to calculate savings derived from competitions. In addition, GAO
found that the Forest Service did not consider certain costs, which were
substantial, in its savings calculations. As a result, Congress may not
have an accurate measure of the savings from the Forest Service's
competitive sourcing competitions during this period.

References

Visible links
  29. http://www.gao.gov/cgi-bin/getrpt?GAO/GGD-10.1.16
  30. http://www.gao.gov/cgi-bin/getrpt?GAO/GGD-95-120
  31. http://www.gao.gov/cgi-bin/getrpt?GAO/GGD-95-22
  32. http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD/GGD-95-130R
  33. http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-94-115
  34. http://www.gao.gov/cgi-bin/getrpt?GAO-04-367
  35. http://www.gao.gov/cgi-bin/getrpt?GAO-04-367
  36. http://www.gao.gov/cgi-bin/getrpt?GAO/GGD-00-68
  37. mailto:[email protected].
  38. mailto:[email protected]
  39. http://www.gao.gov/
  40. http://www.gao.gov/
  41. http://www.gao.gov/fraudnet/fraudnet.htm
  42. mailto:[email protected]
  43. mailto:[email protected]
  44. mailto:[email protected]
  45. http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-00-21.3.1
  46. http://www.fs.fed.us/aboutus/budget/
  47. http://www.gao.gov/cgi-bin/getrpt?GAO/NSIAD-99-44
  48. http://www.gao.gov/cgi-bin/getrpt?GAO-08-195
  49. http://www.gao.gov/cgi-bin/getrpt?GAO-08-195
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