DOD Competitive Sourcing: Results of Recent Competitions (Letter Report,
02/22/99, GAO/NSIAD-99-44).

Pursuant to a congressional request, GAO provided information on the
Department of Defense's (DOD) recent competitive sourcing initiatives,
focusing on: (1) determining the number of sourcing competitions
completed between October 1995 and March 1998 and whether the
competitions had been done in accordance with applicable procedures; (2)
comparing characteristics such as outcomes of recent competitions with
previous competitions in terms of winners of the competitions, time
required to complete the competitions, savings produced, and other
relevant metrics; and (3) identifying the extent of any problems in
implementing the results of the competitions, and plans for government
monitoring of contracts awarded as a result of outsourcing.

GAO noted that: (1) the Air Force held the vast majority of competitions
completed between October 1995 and March 1998--41 of 53; (2) likewise,
85 percent of the positions competed were in the Air Force; (3) while
the number of recently completed competitions is small, the agency
procedures and GAO's analysis of a sample of completed cases indicate
that DOD components are conducting these competitions in accordance with
Office of Management and Budget Circular A-76 guidelines; (4)
additionally, GAO identified only ten appeals under the A-76
administrative appeal process, with only one being upheld; (5) the
private sector won about 60 percent of recent competitions compared to
about 50 percent prior to 1995; (6) also, the time to complete single
and multiple function competitions was 18 and 30 months, respectively,
compared to an average of about 51 months for all prior competitions;
(7) further, the competitions show significant potential for savings,
largely driven by personnel reductions; (8) however, the data is too
limited at this point to reach any conclusions about trends, and
questions exist about the precision and consistency of savings
estimates; (9) moreover limitations continue to exist in DOD databases
used to record savings from A-76 competitions and their usefulness for
tracking changes over time; (10) actions are still required to ensure
that improvements are made in these databases and savings estimates from
completed competitions are tracked over time; (11) the relatively few
implementation problems were independent of whether the private or
public sector had won the competition; (12) for example, a storage and
warehousing contract was terminated for poor performance after a
19-month performance period; (13) in another case, full implementation
of a public maintenance operation was delayed 17 months due to a delay
in being able to recruit enough personnel to perform the work; and (14)
lastly, resources expected to be devoted to monitoring contracts awarded
to the private sector varied depending on the size and complexity of the
functions being reviewed.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-99-44
     TITLE:  DOD Competitive Sourcing: Results of Recent Competitions
      DATE:  02/22/99
   SUBJECT:  Defense procurement
             Contract oversight
             Defense cost control
             Competitive procurement
             Data bases
             Privatization
             Comparative analysis
             Procurement regulations
IDENTIFIER:  DOD Commercial Activities Management Information System
             
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Cover
================================================================ COVER


Report to the Chairman, Subcommittee on Readiness and Management
Support, Committee on Armed Services,
U.S.  Senate

February 1999

DOD COMPETITIVE SOURCING - RESULTS
OF RECENT COMPETITIONS

GAO/NSIAD-99-44

Defense Competitive Sourcing

(709298)


Abbreviations
=============================================================== ABBREV

  CAMIS - Commercial Activities Management Information System
  DOD - Department of Defense
  MEO - most efficient organization
  OMB - Office of Management and Budget

Letter
=============================================================== LETTER


B-279580

February 23, 1999

The Honorable James M.  Inhofe
Chairman, Subcommittee on Readiness
 and Management Support
Committee on Armed Services
United States Senate

Dear Mr.  Chairman: 

In late 1995, the Department of Defense (DOD) began encouraging the
services and defense agencies to conduct competitions between the
public and private sectors to determine who would be responsible for
performing selected functions currently being provided in-house. 
These competitions were to be done in accordance with the Office of
Management and Budget's (OMB) Circular A-76, which provides guidance
for the competitions, and were expected to yield significant savings
that could be used to fund other priority needs such as
modernization.  Currently, DOD components are beginning a significant
number of these public-private competitions using the A-76 process. 

As you requested, we (1) determined the number of sourcing
competitions completed between October 1995 and March 1998 and
whether the competitions had been done in accordance with applicable
procedures; (2) compared characteristics such as outcomes of recent
competitions with previous competitions in terms of winners of the
competitions, time required to complete the competitions, savings
produced, and other relevant metrics; and (3) identified the extent
of any problems in implementing the results of the competitions, and
plans for government monitoring of contracts awarded as a result of
outsourcing. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

The Air Force held the vast majority of competitions completed
between October 1995 and March 1998--41 of 53.  Likewise, 85 percent
of the positions competed were in the Air Force.  While the number of
recently completed competitions is small, the agency procedures and
our analysis of a sample of completed cases indicate that DOD
components are conducting these competitions in accordance with OMB
Circular A-76 guidelines.  Additionally, we identified only 10
appeals under the A-76 administrative appeal process, with only 1
being upheld. 

The private sector won about 60 percent of recent competitions
compared to about 50 percent prior to 1995.  Also, the time to
complete single and multiple function competitions was 18 and 30
months, respectively, compared to an average of about 51 months for
all prior competitions.  Further, the competitions show significant
potential for savings, largely driven by personnel reductions. 
However, the data is too limited at this point to reach any
conclusions about trends, and questions exist about the precision and
consistency of savings estimates.  Moreover limitations continue to
exist in DOD databases used to record savings from A-76 competitions
and their usefulness for tracking changes over time.  Actions are
still required to ensure that improvements are made in these
databases and savings estimates from completed competitions are
tracked over time. 

The relatively few implementation problems were independent of
whether the private or public sector had won the competition.  For
example, a storage and warehousing contract was terminated for poor
performance after a 19-month performance period.  In another case,
full implementation of a public maintenance operation was delayed 17
months due to a delay in being able to recruit enough personnel to
perform the work.  Lastly, resources expected to be devoted to
monitoring contracts awarded to the private sector varied depending
on the size and complexity of the functions being reviewed. 


   BACKGROUND
------------------------------------------------------------ Letter :2

For many years, federal agencies have been encouraged to consider the
potential for significant savings by contracting with the private
sector for commercial type goods and services rather than relying on
government employees to provide them.  Because competitive
outsourcing can potentially displace thousands of government
employees, federal agencies, including DOD components, traditionally
approached competitive sourcing hesitantly.\1 Thus, with a
combination of institutional preference to maintain in-house control
over activities, along with restrictive legislative provisions in
effect between the late 1980s through 1994, DOD activities placed
relatively little emphasis on competitive sourcing during that time. 
The limited competitions that did occur most often involved the Air
Force.  However, in 1995, with congressional and administration
initiatives placing more emphasis on competitive sourcing as a means
of achieving greater economies and efficiencies in operations, DOD's
senior leadership embraced it as a means of achieving savings and
freeing up funds for other priority needs.  In August 1995, the
Deputy Secretary of Defense directed the services to make outsourcing
a priority.  Subsequently, DOD placed emphasis on competitive
sourcing, recognizing that both the public and private sectors are
parties to the competitions.  This new emphasis led to plans by the
services to consider studying over 200,000 positions by the end of
fiscal year 2003. 


--------------------
\1 Instead of the term outsourcing, DOD currently uses the term
competitive sourcing. 


      CIRCULAR A-76 PROCESS
---------------------------------------------------------- Letter :2.1

DOD's competitive sourcing is guided by OMB's Circular A-76, issued
in 1966.  In 1979, OMB supplemented the circular with a handbook that
included procedures for competitively determining whether commercial
activities should be performed in-house, by another federal agency
through an interservice support agreement, or by the private sector. 
OMB updated this handbook in August 1983 and in March 1996.  The
latest revision was intended to reduce the administrative burden of
performing A-76 competitions and to make cost comparisons between
private sector proposals and government estimates more equitable. 
For example, in response to industry concerns that agencies were not
fully accounting for their overhead costs, OMB imposed the
requirement that government overhead costs be calculated based on a
standard rate of 12 percent of direct labor costs and placed
increased emphasis on the use of best value criteria in
competitions.\2

To compare costs of in-house versus contractor performance, OMB's
supplemental handbook requires the government to determine the most
efficient and effective way of performing an activity with in-house
staff.  Based on this most efficient organization (MEO), the
government prepares an in-house cost estimate and compares it with
the offer selected from the private sector.  OMB's A-76 guidance
stipulates that work will remain in-house unless the private sector
offer meets a threshold of savings that is at least 10 percent of
personnel costs or $10 million over the performance period.  The
minimum cost differential was established by OMB to ensure that the
government would not contract out for marginal estimated savings. 
Appendix I contains a more detailed description of the A-76 process. 


--------------------
\2 We previously addressed in a separate report the potential use of
best value under A-76, questions concerning the basis for OMB's new
12-percent overhead rate, as well as long-term challenges facing DOD
as it attempts to produce accurate and reliable cost data.  See
Defense Outsourcing:  Better Data Needed to Support Overhead Rates
for A-76 Studies (GAO/NSIAD-98-62, Feb.  27, 1998). 


      DOD'S HISTORICAL DATA BASE
      FOR A-76 COMPETITIONS
---------------------------------------------------------- Letter :2.2

DOD records the results of its competitive sourcing program in the
Commercial Activities Management Information System (CAMIS).  Each
service and defense agency maintains its own version of CAMIS, but
each system must contain DOD's required minimum set of data elements
for individual A-76 competitions, including numbers and length of
individual competitions, numbers of in-house military and civilian
positions affected, comparisons of in-house and contractor estimated
costs, contract award dates, and changes in costs for 3 years after a
contract award.  DOD also requires that each service enter the
original baseline cost of the function and the estimated dollar
savings from each of the competitions into CAMIS and track actual
costs and savings from the completed competitions for
3 years.  We have previously reported some concerns about the
accuracy and completeness of data contained in the CAMIS system.\3 A
list of our recent reports on competitive sourcing issues is included
at the end of this report. 

DOD's data on cost comparisons completed between fiscal year 1978 and
1994 show that estimated savings occurred--usually through a
reduction in personnel--regardless of whether the government or a
private sector company was awarded the work.  These estimated savings
were achieved primarily by closely examining the work to be done and
reengineering the activities to do them with fewer personnel, whether
in-house or outsourced.\4 DOD's data showed the government won about
half of the A-76 competitions, and the private sector the other half. 


--------------------
\3 OMB Circular A-76:  DOD's Reported Savings Figures Are Incomplete
and Inaccurate (GAO/GGD-90-58, Mar.  15, 1990). 

\4 Base Operations:  Challenges Confronting DOD as It Renews Emphasis
on Outsourcing (GAO/NSIAD-97-86, Mar.  11, 1997). 


      PAST ANALYSIS SUGGESTS
      CAUTION REGARDING SAVINGS
---------------------------------------------------------- Letter :2.3

The Army, Navy, and Air Force project they will each achieve between
20 to 30 percent savings from competitive sourcing, based on prior
experience and/or Center for Naval Analyses study data.\5 While we
believe that competitive sourcing competitions are likely to produce
savings, we have urged caution regarding the magnitude of savings
likely to be achieved.  In March 1997, we reported that prior savings
estimates were based on initial savings estimates from competitive
sourcing competitions, but that expected savings can change over time
with changes in scope of work or mandated wage changes.  Further, we
noted that continuing budget and personnel reductions could make it
difficult to sustain the levels of previously projected savings.  At
the same time, we noted two areas of competitive sourcing that
appeared to offer the potential for significant savings.  These areas
included giving greater emphasis to (1) the use within the applicable
legal standards of a single contract to cover multiple requirements,
rather than multiple contracts, for support services and (2) the
conversion of military support positions to civilian or contractor
positions. 


--------------------
\5 The Center for Naval Analyses is a federally funded research and
development center sponsored by the Department of the Navy. 


   OVERVIEW OF RECENT COMPETITIONS
------------------------------------------------------------ Letter :3

We identified 53 competitions completed between October 1995 and
March 1998, involving 5,757 positions (3,226 military and 2,531
civilian).\6 Of the 53 competitions, 43 involved single functions
such as grounds maintenance, storage and warehousing, and child care
centers; and
10 involved multiple functions such as base operating support and
shelf stocking, receiving, and storage at commissaries. 

A majority (77 percent) of the competitions were held by the Air
Force.  Many of these competitions were initiated prior to or close
to the time that DOD began to emphasize competitive sourcing.  Table
1 shows the number of government positions competed for under
recently completed competitions along with those announced for
competition during fiscal years 1996, 1997, and 1998. 



                                Table 1
                
                Civilian and Military Positions Competed
                  in Recent Completed Competitions and
                   Those Announced for Competition in
                   Fiscal Years 1996, 1997, and 1998

                                                             Positions
                                Positions competed        announced in
                                   between October  fiscal years 1996,
                                1995 through March    1997, and all of
Defense component                             1998                1998
------------------------------  ------------------  ------------------
Army                                            94              27,437
Navy                                           154              20,893
Air Force                                    4,895              20,772
Marine Corps\a                                   0                   0
Defense agencies\                              614               5,402
======================================================================
Total                                        5,757              74,504
----------------------------------------------------------------------
\a Since the Marine Corps did not have any completed competitions, it
was not reviewed for this report. 

Source:  Our analysis is based on Army, Navy, Air Force, Defense
Logistics Agency, Defense Commissary Agency, Defense Health Plan, and
Defense Finance and Accounting Service information. 

Although most (85 percent) of the recently completed competitions
belonged to the Air Force, table 1 shows that most of the defense
components, reacting to the August 1995 guidance from the Deputy
Secretary of Defense, have mounted an aggressive program.  Most
components can be expected to complete considerably more competitions
each year for the next several years.  However, unlike the most
recently completed competitions, most future competitions are
expected to involve civilian rather than military positions. 


--------------------
\6 As noted in our scope and methodology, the 53 competitions
represented those identified from the CAMIS database as well as
competitions not included in the database but which were identified
in discussions with agency officials.  Appendix II provides summary
statistical data for each of the
53 competitions. 


      EXTENT TO WHICH APPEALS OR
      OTHER CONCERNS WERE RAISED
      ABOUT THE COMPETITIONS
---------------------------------------------------------- Letter :3.1

In examining the results of the 53 completed A-76 competitions, we
found that 10 appeals had been filed; half were filed by government
and half by private sector firms.\7 These appeals were based on
questions regarding compliance with the requirements of Circular A-76
and its supplemental handbook, and/or questions regarding costs
entered on the cost comparison form.  One appeal, however, did not
meet this criteria and was dismissed.  Of the appeals accepted for
consideration, only one resulted in a reversal of the original award
decision.  The private sector competitor stated that the government
in-house estimate did not include all relevant costs, and the
agency's reviewing authority agreed.  When these costs were included
in the government's estimate, the private sector firm's price was
lower.  In addition to the 10 appeals cited above, we identified one
protest to GAO from one of the private sector competitors.\8 GAO
upheld the service's decision to retain the activity in-house. 

We also examined the files of a sample of nine completed competitions
and conducted interviews with officials associated with completing
the competitions and satisfied ourselves that the required cost
comparisons were made as required by A-76 guidelines.  In eight
instances, we found that the agencies had elected to conduct
public/private competitions and cost comparisons even where the
number of civilian employees involved was less than 10, and according
to A-76 guidance, direct conversions could have been made without
competition.  Agency officials said that they conducted a cost
comparison on these functions, because they felt it was fairer to the
employees.  At the same time, service and defense agency officials
indicated that during the period covered by our review, they directly
converted to contract 119 functions, each involving 10 or fewer
positions. 


--------------------
\7 OMB Circular A-76 provides an administrative appeal process for
federal employees (or their representatives) and contractors that
have submitted bids or offers who would be affected by a tentative
cost comparison decision to convert to or from in-house, contract or
performance under an interservice support agreement.  In the appeal
of a tentative cost comparison decision, the designated appeal
authority must be independent of the activity under review or at
least two organizational levels above the official who certified the
Government's Management Plan and MEO. 

\8 Generally, we decline to review an agency's decision whether to
perform a commercial activity in-house or through use of a
contractor.  However, where the A-76 process has included the
issuance of a competitive solicitation for purposes of conducting a
cost comparison, GAO will review agency decisions to determine
whether the agency performed the cost comparison in the manner
required by the terms of the solicitation.  Only those parties who
are otherwise eligible to file a protest under GAO's Bid Protest
Regulations may avail themselves of this option and only if they have
already exhausted the administrative appeals process.  GAO will
recommend corrective action only if the record indicates that the
agency did not accurately perform the cost comparison and that this
failure could have materially affected its outcome.  See Madison
Servs., Inc., B-277614, Nov.  3, 1997. 


   CHARACTERISTICS OF COMPLETED
   COMPETITIONS AND HISTORICAL
   TRENDS
------------------------------------------------------------ Letter :4

Most services and defense agencies have completed few competitions. 
Accordingly, these competitions cannot be viewed as representing a
trend or necessarily indicative of future outcomes.  Nevertheless,
they provide some initial data for limited comparison on a variety of
metrics such as outcomes won by the public and private sectors, time
required to complete the competitions, use of best value, and
indications of savings. 


      COMPETITION WINNERS
---------------------------------------------------------- Letter :4.1

Overall, 60 percent of the competitions were won by the private
sector.  Table 2 summarizes the number of competitions and results by
individual defense activities. 



                                Table 2
                
                 Competitions Completed and Results By
                Defense Components Between October 1995
                             and March 1998

                                              Private sector winners
                                            --------------------------
                                 Number of
                              competitions
Defense component                completed        Number       Percent
----------------------------  ------------  ------------  ------------
Army                                     3             2            67
Navy                                     3             3           100
Air Force                               41            24            59
Defense Commissary                       4             3            75
 Agency
Defense Finance and                      2             0             0
 Accounting Service
======================================================================
Total                                   53            32            60
----------------------------------------------------------------------
Source:  Our analysis is based on Army, Navy, Air Force, Defense
Commissary Agency, and Defense Finance and Accounting Service
information. 

The aggregate data shows an increase in the number of competitions
won by the private sector, compared with the historic trend of about
50 percent for all services.\9 However, the percent won by the
private sector was closer to the Air Force's historic average of 60
percent.  At the same time, when considering all competitions
completed in the October 1995 through March 1998 time frame, the
percentage of competitions won by the private and public sectors
fluctuated over time.  For example, for 26 competitions completed in
fiscal years 1996 and 1997, 77 percent were won by the private
sector.  This contrasted with 27 competitions completed between
October 1997 and March 1998, where 56 percent were won by the private
sector. 

We also analyzed the results to determine whether any differences
existed among winners depending on whether competitions involved
single or multiple functions.  We found that 43 of the competitions
involved single functions, while 10 involved multiple functions. 
However, the outcomes were the same for each grouping, with 60
percent being won by the private sector. 

We further analyzed the results to determine to what extent the use
of a standardized 12-percent overhead rate imposed on government cost
estimates may have affected the outcome of the competitions.  As
previously noted, the private sector has historically registered
concerns about the extent to which government activities fully
account for costs of their operations in developing MEOs under the
A-76 process.  Also, some concerns existed on the public side that
the new overhead rate could cause more competitions to be won by the
private sector.  As noted in our February 1998 report, in reviewing
development of this overhead rate, we found that the 12-percent rate
lacked an analytical basis.  As a result, it could either understate
or overstate overhead costs in any specific/particular
competition.\10

We found that 39 (74 percent) had used the 12-percent overhead rate. 
Of those, 54 percent were won by the private sector.  The remaining
14 competitions were not required to use this rate because they were
either completed prior to its implementation or were in the final
stages of the process.  Of these, 10 did not use any overhead rate,
and the 4 others used overhead rates ranging from 0.1 percent to 12.4
percent. 


--------------------
\9 Our analysis also showed that the private sector won 53 percent
($390.1 million) of the value of the winning bids. 

\10 In our February 1998 report, we noted limitations in DOD's
accounting systems and its inability to fully identify the costs of
operations.  Efforts are underway to improve government cost data and
supporting systems.  Recent legislative and management reform
initiatives, such as the Chief Financial Officers Act and the Federal
Financial Accounting Standards Board Statement 4, have emphasized the
need for better information, including cost data, to support federal
decision-making and measure the results of program operations. 
Standard 4 requires that agencies use full costing in their
managerial accounting systems so that total operational costs and
unit costs of outputs can be determined.  However, at that time we
reported efforts to improve these systems in DOD are underway but may
require several years to be fully completed. 


      COMPETITION TIME FRAMES
---------------------------------------------------------- Letter :4.2

Because there were no required time frames to perform A-76
competitions, a provision was included in the Department of Defense
Appropriations Act for Fiscal Year 1991 (Public Law 101-511) and
subsequent DOD appropriations acts, directing that single function
A-76 competitions be completed within 24 months and multi-function
competitions within
48 months.  In July 1991, we reported that DOD averaged 51 months to
complete A-76 competitions during fiscal years 1987 to 1990.\11 We
found that the time to complete the competitions in our review has
decreased to an average time of 18 months for single function
competitions and 30 months for multiple function competitions.  Table
3 indicates the average length of time required to complete the
recent A-76 competitions. 



                                Table 3
                
                  Average Number of Months Required to
                 Complete Competitions Between October
                          1995 and March 1998

                          Number of
                         competitions
                          completed
                        --------------
                                          Average time    Average time
                                            for single    for multiple
                                Multip        function        function
Defense activity        Single      le    competitions    competitions
----------------------  ------  ------  --------------  --------------
Army                         3       0              11               0
Navy                         3       0              19               0
Air Force                   36       5              18              27
Defense agencies             1       5              23              33
Overall average             43      10            18\a            30\a
----------------------------------------------------------------------
\a Average time based on summarizing study times for individual
competitions within the applicable category. 

Source:  Our analysis is based on Army, Navy, Air Force, Defense
Commissary Agency, and Defense Finance and Accounting Service
information. 

While the Army had few completed competitions, all involving single
functions, they averaged 11 months to complete.  While this figure
shows that some competitions can be completed relatively quickly, it
must be viewed with caution because the number reflects a very
limited number of completed competitions.  Additionally, other data
suggests that many competitions are likely to take much longer than
the competitions included in this review.  For example, a recent Army
Audit Agency report noted that the Army's installations and major
commands currently estimate that it will take about 50 percent longer
than the Army's goal of completing competitions with up to 100
positions within 13 months and competitions involving over 600
positions within 21 months.\12

The Navy's goal is to complete its competitions between 12 to 36
months.  Again, while our review shows that the Navy completed its
competitions, on average, in 19 months, only three single function
competitions had been completed--not enough competitions to draw any
conclusions about how long future competitions will take. 

Air Force officials currently project completing competitions within
24 to 48 months.  Our review showed that to date the Air Force has
completed, on average, its recent single function competitions in 18
months, and its multiple function competitions in 27 months. 

The Defense Finance and Accounting Service's goal is to complete its
competitions in 12 months.  Its single function competition took 23
months, and its multiple function competition took 27 months to
complete.  The Defense Commissary Agency's goal is to complete the
competitions sooner, but they do not have a set target.  Its multiple
function competitions have taken an average of 34 months. 


--------------------
\11 OMB Circular A-76:  Legislation Has Curbed Many Cost Studies in
Military Services (GAO/GGD-91-100, July 30, 1991). 

\12 Observations and Lessons Learned on A-76 Cost Competition Studies
(U.S.  Army Audit Agency
AA 98-340, Sept.  22, 1998). 


      USE OF BEST VALUE CRITERIA
---------------------------------------------------------- Letter :4.3

The most recent revision to OMB's Circular A-76 supplemental handbook
heightened attention to the consideration of "best overall value to
the government" competitions.  When best value criteria are
considered, the government expects to obtain a better value by
comparing the private sector's technical proposals and making
trade-offs between various factors such as past performance and
costs.  The best private sector offer is then selected.  Next, the
government's in-house offer is reviewed to ensure that it meets the
same level of performance and performance quality as the private
sector offeror.  If it does not, the government is required to change
its offer and cost estimate before the final comparison is made to
determine which represents the winner of the cost comparison. 
Sixteen of the 53 completed competitions competed between October
1995 and March 1998 used best value criteria. 


      UNCERTAINTY ABOUT THE
      MAGNITUDE OF SAVINGS FROM
      COMPETITIONS CONTINUES
---------------------------------------------------------- Letter :4.4

Recently completed competitions continue to show that sourcing
competitions can produce significant savings, particularly in
reducing personnel requirements, even when these competitions are won
by in-house organizations.  However, the data is too limited at this
point to reach any conclusions about trends.  At the same time, the
services are inconsistent in how they calculate savings.  Also, while
initial savings estimates may sometimes be understated, changes do
occur in outsourcing contracts, sometimes fairly soon after contracts
are awarded, which can reduce the magnitude of savings expected over
time.  As indicated in our previous reports, we continue to express
caution about the extent to which the level of initial savings will
continue over time given changes that occur, and the previous lack of
attention in DOD to tracking savings over time.  Our current work
also reinforces previous concerns expressed about the adequacy and
reliability of the CAMIS databases used by the services to record
savings from A-76 competitions, and their usefulness for tracking
changes over time. 


         INITIAL SAVINGS ESTIMATES
         FROM RECENT COMPETITIONS
         ARE EXPECTED TO BE
         SUBSTANTIAL
-------------------------------------------------------- Letter :4.4.1

Data available from the services and defense agencies for their
recently completed competitions suggests that the 53 completed
competitions were projected to result in savings of $528 million over
the life of the multiyear awards and would average 42 percent;
similar savings were projected regardless of whether the competitions
were won by the private sector or in-house. 

While most savings from sourcing competitions are related to reduced
personnel costs, the extent to which the work can be done with fewer
personnel is most clearly shown when in-house organizations win.\13
While some of the recent competitions won by in-house organizations
resulted in fairly small personnel reductions, a few show the
potential for significant reductions in personnel, in some instances
totaling over 50 percent, assuming, as discussed later, these planned
reductions hold up over time.  Such reductions show the benefit of
studying in-house operations to identify the most efficient
organizations.  However, in one instance personnel requirements
increased because the function being competed was not fully staffed
at the time it was competed.  See appendix II for position reductions
associated with competitions won in-house and by the private sector. 


--------------------
\13 Where competitions are won by the private sector, government
positions are eliminated as the work is transferred to private sector
employees under contract; in those situations, the number of
government positions eliminated does not represent the actual
reduction in personnel required to perform the function being
outsourced. 


         VARIATIONS IN HOW SAVINGS
         ARE CALCULATED
-------------------------------------------------------- Letter :4.4.2

In examining the competitions, we found that the Air Force, the Army,
and the Defense Finance and Accounting Service had tried to identify
the costs of their current operations to provide a baseline for
projecting claimed savings.  The Air Force determined a baseline
personnel cost--usually the largest cost associated with performing a
function--and then deducted either the winning contract price or MEO
estimate to calculate an estimated savings figure, according to an
Air Force official.  The Army does not have official guidance on
determining savings.  However, we found the Army calculates the
baseline cost by multiplying baseline workyears by the average cost
per workyear in the MEO estimate.  Savings are then calculated by
subtracting the winning contract price or MEO estimate from the
baseline cost.  By using the average cost per workyear in the MEO
estimate, savings are determined in terms of current year dollars. 

Projected Defense Finance and Accounting Service savings were
calculated using an estimate of baseline costs prior to the
competitions, while projected savings of the Defense Commissary
Agency were calculated by taking the difference between the MEO and
the private sector contractor's offer, according to respective agency
officials. 

A Navy official told us there is currently no official Navy guidance
on how to determine savings.  He also said that if an activity has
determined a baseline cost of operations, savings can be determined
by subtracting the winning offer from the baseline.  However, if no
baseline information is available, the difference between the MEO and
a winning contractor's offer, for example, may be used to estimate
savings.  For two of the three Navy competitions we reviewed, the
Center for Naval Analyses developed an estimate of savings using
baseline estimates.  A savings estimate for the third Navy
competition was computed by subtracting the MEO estimate from the
contractor's offer. 


         PROJECTED SAVINGS ARE
         SUBJECT TO CHANGE OVER
         TIME
-------------------------------------------------------- Letter :4.4.3

DOD's projection of savings from A-76 competitions have historically
been derived from savings projections identified at the conclusion of
competitions.  DOD and the services have not traditionally tracked
cost changes that occurred afterwards and revised projected savings. 
In March 1997, we reported that historic difficulties in preparing
good performance work statements had often required revisions.  We
noted that those revisions and changes in required labor rates and
other factors can require contract modifications and adjustments to
costs of work to be done.  To the extent performance work statements
need to be subsequently adjusted because they do not adequately
capture the scope of work to be done, initial savings baseline
estimates are overstated. 

Although most of the competitions included in our review had only
been completed for about 15 months or less, we found that changes in
performance work statements had occurred in 18 of the 53
competitions.  Some changes were due to inadequate initial statements
of work; many others were due to new missions or work requirements
that were not known at the time the performance work statement was
written. 

Two contracts had to be recompeted because of inadequate performance
work statements.  For example, a contract for grounds maintenance at
Keesler Air Force Base, Mississippi, had to be terminated because the
performance work statement did not adequately reflect the work that
had to be done.  Subsequently, it has taken a year to rewrite this
statement and resolicit the function, according to a base official. 
In another instance, a performance work statement was modified after
award for aircraft maintenance according to an Altus Air Force Base,
Oklahoma, official, to increase inspections on C-141 aircraft
included in the original statement of work, as well as adding work
involving support for the C-17 aircraft.  The C-17 aircraft was
assigned to Altus after the cost comparison had been completed.  An
Air Force official said that they do not adjust estimated savings
once performance periods begin because changes frequently occur in
performance work statements that make it difficult to determine
actual savings. 

Also, since savings estimates are based on the winner successfully
performing the function for the entire award period, savings from the
competitions may diminish, for example, if contracts are terminated
before the end of this period.  Of the 32 competitions that were won
by the private sector, 4 were terminated within 14 to 26 months.  In
one instance, a contract for storage and warehousing services at Fort
Riley, Kansas, was terminated after 19 months due to unsatisfactory
performance.  This work is now being done by a contractor as part of
an Air Force regional maintenance contract. 


      DATA SYSTEMS PROVIDE
      INADEQUATE BASIS FOR
      TRACKING SAVINGS
---------------------------------------------------------- Letter :4.5

DOD's projections of savings from A-76 competitions have typically
been drawn from CAMIS data.  Available information indicates that the
savings, once captured in CAMIS, are not modified and are being used
continuously without updating the data to reflect changes in or even
termination of contracts.  DOD officials have noted that they could
not determine from the CAMIS data if savings were actually being
realized from the A-76 competitions.  Our work continues to show
important limitations in CAMIS data. 

Our March 1990 report stated that CAMIS contained inaccurate and
incomplete data.  We further stated that it did not accurately track
baseline costs or reasons for contract changes, and contained
inaccurate and incomplete data on items such as program
implementation or contract administration costs.  For example, we
found that although DOD required components to report staff hours
expended to perform individual competitions, most of the data was not
being reported or did not appear reasonable.  Our current work and
recent work by others have shown that the situation has not changed
appreciably.  In a 1996 report, the Center for Naval Analyses found
that the data in CAMIS was incomplete and inconsistent between the
services and recommended that the data collection process be more
tightly controlled so that data is consistently recorded.\14

During our review, we found that CAMIS did not always record
completed competitions and sometimes incorrectly indicated that
competitions were completed where they had not yet begun or were
still underway.  We also identified instances where savings data
recorded for completed competitions were incorrect based on other
data provided by the applicable service.  For example, the system
listed the annual savings from the competition of the base operating
support and aircraft maintenance at Tyndall Air Force Base, Florida,
as approximately $80 million; however, our analysis of data provided
on this competition estimated the projected annual savings to be
about $22 million.  Air Force officials indicated that an error had
been made when this information was entered into CAMIS. 

We also found that the Air Force's CAMIS savings projections were not
adjusted and removed from the system when bases were closed or
realigned, thereby, artificially raising the total savings figure. 
Air Force officials agreed that these savings should not be included
in their system.  Our analysis indicated that the erroneous figures
amount to about 14 percent of the Air Force's total claimed position
savings from A-76 competitions since 1979. 

DOD officials have recognized significant limitations in CAMIS and
are currently making plans to improve the system.  A recent DOD
review indicated that only about 20 percent of the Army and Air
Force's systems contained complete cost data on competitions after
they were implemented.  Further, it found these competition results
were not typically tracked for 3 years and not over the life of the
contract, which is usually 5 years.  As a result, DOD officials
anticipate issuing new guidance to the services to improve the
system.  DOD officials indicate that they plan to make changes to
better track cost and savings information.  They also plan to obtain
cost data for 5 years.  This is in keeping with requirements imposed
as part of the National Defense Authorization Act for Fiscal
Year 1998 amendments to 10 U.S.C.  2463.  Further, they plan to
strengthen their oversight responsibilities.  Their objective is to
have all changes implemented by the fall of 1999. 


--------------------
\14 An Examination of the DOD Commercial Activities Competition Data
(Center for Naval Analyses
CIM 472, Dec.  1996). 


   PERFORMANCE PROBLEMS HAVE THUS
   FAR BEEN LIMITED
------------------------------------------------------------ Letter :5

Most of the competitions included in our study have been concluded
for a relatively short period of time--21 contracts have been in
effect, on average, 15 months or less--making it difficult to provide
a meaningful assessment of performance over any significant period of
time.  Nonetheless, we identified a few situations where problems had
arisen whether competitions were won in-house or by the private
sector.  Plans for government monitoring of private sector contract
awards varied by size and complexity of the functions outsourced. 


      FEW IMPLEMENTATION PROBLEMS
      IDENTIFIED
---------------------------------------------------------- Letter :5.1

We identified only a few performance problems on contracts awarded as
the result of competitions won by the private sector.  We also found
that implementation problems can also arise when competitions are won
by in-house organizations. 

In one instance involving a storage and warehousing contract at Fort
Riley, Kansas, the contract was terminated after the first full
performance period (19 months) because of poor contractor
performance, according to contract officials.  In another instance, a
grounds maintenance contract at Keesler Air Force Base, Mississippi,
was terminated.  Officials there attributed the cause partly to
contractor performance and also partly due to a poorly written
performance work statement. 

We also identified a problem in implementing an in-house MEO where
the government activity had won the competition.  This involved the
conversion of an aircraft maintenance operation at Altus Air Force
Base, Oklahoma, from a mostly military operation to one to be
operated by government civilians.  Full implementation of the
aircraft maintenance most efficient organization at Altus Air Force
Base had to be extended
17 months--from December 1996 to April 1998--due to a delay in being
able to recruit enough personnel for the work.  During this
transition, the Air Force had to arrange for some of the maintenance
work to be done by other organizations.  In addition, while this
transition was going on, the Air Force consolidated its personnel
function into one location, which caused further delays in hiring. 


      MONITORING PLANS DEPEND ON
      SIZE AND COMPLEXITY OF
      WORKLOAD
---------------------------------------------------------- Letter :5.2

The performance criteria or standards used to monitor contractor, as
well as in-house, performance are laid out in the quality assurance
surveillance plans, which accompany the performance work statements
developed for competitive sourcing competitions.  These plans also
include the resources needed to conduct performance reviews.  The
number of personnel assigned to the monitoring of contracts won by
the private sector will vary depending upon the size and complexity
of the functions being competed.  For example, a single location,
single function competition at the Naval Telecommunications Station,
Stockton, California, had only two government personnel assigned to
oversee the contract.  While, a multiple location, multiple function
competition involving the Defense Finance and Accounting Service's
facilities, logistics, and administrative services had plans for 15
government personnel to oversee its implementation at 5 different
locations--3 people at each location.  For selected competitions we
reviewed in detail, DOD officials told us they believed that the
number of oversight personnel had been adequate. 


   CONCLUSIONS
------------------------------------------------------------ Letter :6

Defense components appear to be conducting competitive sourcing
competitions in accordance with OMB Circular A-76 guidelines.  While
the results of recently completed competitions included in our review
may not be indicative of future competitions, they do indicate that
both the public and private sector competitors each continue to win a
great number of the competitions; that recent competitions have taken
less time than in the past, but longer than the current DOD goals for
competitions.  These competitions show the potential for significant
savings; however, various factors cause the initial savings
projections to be imprecise.  How well the level of savings hold up
over time remains to be determined, as work requirements and costs
change.  Improvements are still needed in DOD's database to ensure
that results from A-76 competitions and savings estimates are tracked
over time, with adjustments made as needed for competitions won by
the private as well as the public sector. 


   RECOMMENDATIONS
------------------------------------------------------------ Letter :7

We recommend that the Secretary of Defense establish specific
guidance and milestones for defense components to follow in making
needed improvements to their CAMIS databases to ensure accurate and
complete information is developed and maintained.  Likewise, we
recommend that the Secretary provide defense components guidance for
monitoring and making periodic adjustments to savings estimates
resulting from competitive sourcing competitions whether won by the
private or public sectors.  The guidance should specify that changes
in costs of work, other than changes in costs unrelated to the
competitions such as mission changes and/or new work, should be used
to adjust estimated savings. 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :8

DOD concurred with the report's findings concerning the need for
improvements to the Commercial Activities Management Information
System and the necessity to provide components guidance for adjusting
savings.  It also indicated it planned to implement our
recommendations as part of overall improvements planned for its
management information system.  DOD's written comments on a draft of
this report are included in appendix III. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :9

To determine the results of the A-76 competitions and related
appeals, we spoke with officials from the Office of the Secretary of
Defense, Departments of the Army, the Navy, and the Air Force; the
Marine Corps; the Defense Finance and Accounting Service; and the
Defense Commissary Agency to obtain listings of competitions
completed from October 1995 through March 1998 and the performance
and oversight of the winners.  We obtained information on the 53 A-76
competitions completed within DOD from October 1995 to March 1998.\15

We also judgmentally selected nine of these competitions to more
fully assess whether they were conducted in accordance with OMB
Circular A-76 guidelines, and if DOD officials felt that contractor
oversight was adequate.  We made our selection of cases to ensure we
had coverage for military services and defense agencies. 

In this report, we considered a competition to be completed when an
award was made to a contractor or the final decision was made to keep
the function in-house between October 1, 1995, through March 31,
1998.  The Marine Corps did not have any completed competitions that
met this criteria.  Therefore, the Marine Corps was not reviewed for
this report. 

Because of our concerns about the reliability of the CAMIS database,
to obtain details on each competition we contacted the contracting
officials or officials in charge for each of the completed cases.  We
also met with contracting and other installation officials at four
installations and the Defense Finance and Accounting Service where
the A-76 competitions were conducted to review and discuss in detail
the process followed for the nine selected competitions.  To
determine if the nine competitions were in compliance, we compared
agency procedures with the protocols outlined in the A-76 handbook. 
The competitions selected for detailed review were storage and
warehousing, Fort Riley, Kansas; dining facility, Fort Sam Houston,
Texas; Naval Computer and Telecommunications Station, Stockton,
California; aircraft maintenance, Altus Air Force Base, Oklahoma;
base operating support, Laughlin Air Force Base, Texas; base
operating support and aircraft maintenance, Tyndall Air Force Base,
Florida; regional jet engine maintenance, Laughlin Air Force Base,
Texas; base operating support, Columbus Air Force Base, Mississippi;
and facilities, logistics, and administration services, Defense
Finance and Accounting Service, Denver, Colorado; Indianapolis,
Indiana; Kansas City, Missouri; Cleveland, Ohio; and Columbus, Ohio. 
With the exception of the Air Force, to determine the estimated
dollar savings from each of the competitions, we contacted the
contracting officials who were responsible for each of the A-76
competitions.  The savings information for all Air Force competitions
is determined centrally at the Air Force's Innovations Center,
Randolph Air Force Base, Texas.  In addition, for two of the three
competitions completed by the Navy, we obtained the estimated dollar
savings from Center for Naval Analyses reports.  We also discussed
the methodology used to determine savings with officials from the
Army, the Navy, the Air Force, the Defense Finance and Accounting
Service, and the Defense Commissary Agency.  We did not independently
verify the savings estimates or the number of positions reduced. 

To determine the factors that could affect the actual savings
achieved from the competitions, we analyzed the data obtained on each
of the competitions, and reviewed prior reports on outsourcing. 

We performed our review from September 1997 to November 1998 in
accordance with generally accepted government auditing standards. 


--------------------
\15 Because of the difficulties encountered with the reliability of
CAMIS, we cannot be certain that our universe of 53 competitions is
complete. 


---------------------------------------------------------- Letter :9.1

We are sending copies of this report to the Secretaries of Defense,
the Army, the Navy, and the Air Force; the Commandant of the Marine
Corps; the Director, Office of Management and Budget; and other
interested congressional committees.  Copies will also be made
available to others upon request.  Please contact me on (202)
512-8412 if you or your staff have any questions concerning this
report.  Major contributors to this report are listed in appendix IV. 

Sincerely yours,

David R.  Warren, Director
Defense Management Issues


THE A-76 PROCESS
=========================================================== Appendix I

In general, the A-76 process consists of six key activities--(1)
developing a performance work statement and quality assurance
surveillance plan; (2) conducting a management study to determine the
government's most efficient organization (MEO); (3) developing an
in-house government cost estimate for the MEO; (4) issuing a Request
for Proposals or Invitation for Bids; (5) evaluating the proposals or
bids and comparing the in-house estimate with a private sector offer
or interservice support agreement and selecting the winner of the
cost comparison; and (6) addressing any appeals submitted under the
administrative appeals process, which is designed to ensure that all
costs are fair, accurate, and calculated in the manner prescribed by
the A-76 handbook. 

Figure I.1 shows an overview of the process.  The solid lines
indicate the process used when the government issues an Invitation
for Bids, requesting firm bids on the cost of performing a commercial
activity.  This type of process is normally used for more routine
commercial activities, such as grass-cutting or cafeteria operations,
where the work process and requirements are well defined.  The dotted
lines indicate the additional steps that take place when the
government wants to pursue a negotiated, "best value" procurement. 
While it may not be appropriate for use in all cases, this type of
process is often used when the commercial activity involves high
levels of complexity, expertise, and risk. 

   Figure I.1:  Overview of the
   A-76 Process

   (See figure in printed
   edition.)

Source:  Air Force Air Education and Training Command documents. 


The circular requires the government to develop a performance work
statement.  This statement, which is incorporated into either the
Invitation for Bids or Request for Proposals, serves as the basis for
both government estimates and private sector offers.  If the
Invitation for Bid process is used, each private sector company
develops and submits a bid, giving its firm price for performing the
commercial activity.  While this process is taking place, the
government activity performs a management study to determine the most
efficient and effective way of performing the activity with in-house
staff.  Based on this "most efficient organization," the government
develops a cost estimate and submits it to the selecting authority. 
The selecting authority concurrently opens the government's estimate
along with the bids of all private sector firms. 

According to OMB's A-76 guidance, the government's in-house estimate
wins the competition unless the private sector's offer meets a
threshold of savings that is at least 10 percent of direct personnel
costs or $10 million over the performance period.  This minimum cost
differential was established by OMB to ensure that the government
would not contract out for marginal estimated savings. 

If the Request for Proposals--best value process--is used, the
Federal Procurement Regulation and the A-76 supplemental handbook
require several additional steps.  The private sector offerors submit
proposals that often include a technical performance proposal and a
price.  The government prepares an in-house management plan and cost
estimate based strictly on the performance work statement.  On the
other hand, private sector proposals can offer a higher level of
performance or service. 

The government's selection authority reviews the private sector
proposals to determine which one represents the best overall value to
the government based on such considerations as (1) higher performance
levels, (2) lower proposal risk, (3) better past performance, and (4)
cost to do the work.  After the completion of this analysis, the
selection authority prepares a written justification supporting its
decision.  This includes the basis for selecting a contractor other
than the one that offered the lowest price to the government.  Next,
the authority evaluates the government's offer and determines whether
it can achieve the same level of performance and quality as the
selected private sector proposal.  If not, the government must then
make changes to meet the performance standards accepted by the
authority.  This ensures that the in-house cost estimate is based
upon the same scope of work and performance levels as the best value
private sector offer.  After determining that the offers are based on
the same level of performance, the cost estimates are compared.  As
with the Invitation for Bids process, the work will remain in-house
unless the private offer is (1) 10 percent less in direct personnel
costs or (2) $10 million less over the performance period. 

Participants in the process--for either the Invitation for Bids or
Request for Proposals process--may appeal the selection authority's
decision if they believe the costs submitted by one or more of the
participants were not fair, accurate, or calculated in the manner
prescribed by the A-76 handbook. 


LIST OF OMB CIRCULAR A-76
COMPETITIONS COMPLETED OCTOBER
1995 THROUGH MARCH 1998
========================================================== Appendix II

                               (Dollars in millions)

De
fe
ns
e
co
mp
on
en
t/
ma
jo
r                                                                   Amount
co                                  Positions  Positions                of    Total
mm                                  competed   reduced              multi-   multi-
an                   Function       (Civ./     (Civ./                 year     year
ds      Location     competed       mil.)\a    mil.)\a    Winner     award  savings
--  --  -----------  -------------  ---------  ---------  -------  -------  -------
Fi
sc
al
ye
ar
19
96

Ar
my

Fo      Fort Riley,  Storage &      29 civ.    29 civ.    Contrac      3.0      4.3
rc      KS           warehousing                          tor
es
Co
mm
an
d

Me      Fort Sam     Dining         13 civ.    15 civ.    Contrac      5.4      3.0
di      Houston, TX  facility                             tor
ca
l
Co
mm
an
d

Na
vy

Bu      San Diego,   Child care     22 civ.    22 civ.    Contrac      0.4      0.7
re      CA           center                               tor
au
of
Me
di
ci
ne
&
Su
rg
er
y

Ai
r
Fo
rc
e

Ai      Davis        Military       1 mil.     1 mil.     Contrac      5.1      1.7
r       Monthan      family         30 civ.    29 civ.    tor
Co      AFB,\b AZ    housing
mb                   maintenance
at
Co
mm
an
d

Ai      Eglin AFB,   Range mobile   23 civ.    39 civ.    Contrac      5.9      3.2
r       FL           target                               tor
Fo                   support
rc
e
Ma
te
ri
el
Co
mm
an
d

Ai      Little Rock  Transient      11 civ.    11 civ.    Contrac      2.2     0.26
r       AFB, AR      aircraft                             tor
Ed                   maintenance
uc
at
io
n
&
Tr
ai
ni
ng
Co
mm
an
d

Ai      Maxwell      Fuels          16 mil.    11 mil.    In-          2.2      2.1
r       AFB, AL      management     7 civ.                house
Ed                                                        MEO
uc
at
io
n
&
Tr
ai
ni
ng
Co
mm
an
d

Ai      Goodfellow   Ground         Under      Under      Contrac      0.9      0.5
r       AFB, TX      maintenance    contract   contract   tor
Ed                                  for last   for last
uc                                  10 years   10 years
at
io
n
&
Tr
ai
ni
ng
Co
mm
an
d

Ai      Laughlin     Base           177 mil.   177 mil    Contrac     29.4     29.8
r       AFB, TX      operating      101 civ.   93 civ.    tor
Ed                   support
uc
at
io
n
&
Tr
ai
ni
ng
Co
mm
an
d

Ai      Keesler      Ground         13 civ.    29 civ.    Contrac      2.1      1.6
r       AFB, MS      maintenance                          tor
Ed
uc
at
io
n
&
Tr
ai
ni
ng
Co
mm
an
d

Ai      Altus AFB,   Aircraft       1,401      692 mil.   In-        165.5     99.6
r       OK           maintenance    mil.       17 civ.    house
Ed                                  43 civ.               MEO
uc
at
io
n
&
Tr
ai
ni
ng
Co
mm
an
d

Pa      Anderson     Refuse         14 civ.    13 civ.    Contrac      0.4      3.2
ci      AFB, Guam    collection                           tor
fi
c
Ai
r
Fo
rc
es

Pa      Anderson     Military       34 civ.    32 civ.    Contrac     11.0      4.9
ci      AFB, Guam    family                               tor
fi                   housing
c                    maintenance
Ai
r
Fo
rc
es

Ma
ri
ne
s

No
ne

DE
CA
\c

No
ne

DF
AS
\d

No
ne

Fi
sc
al
ye
ar
19
97

Ar
my

No
ne

Na
vy

Na      Rough &      Telecommunica  15 mil.    27 civ.    Contrac      7.8      4.2
va      Ready        tions center   29 civ.               tor
l       Island,
Co      Stockton,
mp      CA
ut
er
&
Te
le
co
mm
un
ic
at
io
ns
Co
mm
an
d

Ai
r
Fo
rc
e

Ai      Nellis AFB,  Military       29 civ.    33 civ.    Contrac      8.4      1.0
r       NV           family                               tor
Co                   housing
mb                   maintenance
at
Co
mm
an
d

Ai      Eglin AFB,   Library        8 civ.     8 civ.     Contrac      1.4      0.1
r       FL           services                             tor
Fo
rc
e
Ma
te
ri
el
Co
mm
an
d

Ai      Laughlin     Regional jet   50 civ.    63 civ.    Contrac     31.4     25.5
r       AFB, TX      engine                               tor
Ed                   maintenance
uc
at
io
n
&
Tr
ai
ni
ng
Co
mm
an
d

Ai      Lackland     Animal         26 civ.    24 civ.    Contrac      3.8      1.7
r       AFB, TX      caretaking                           tor
Ed
uc
at
io
n
&
Tr
ai
ni
ng
Co
mm
an
d

Ai      Maxwell      General        12 civ.    3 civ.     In-          1.9      0.1
r       AFB, AL      library                              house
Ed                                                        MEO
uc
at
io
n
&
Tr
ai
ni
ng
Co
mm
an
d

Ai      Bolling      Military       31 civ.    36 civ.    Contrac      4.5      4.4
r       AFB, D.C.    family                               tor
Fo                   housing
rc                   maintenance
e
Di
st
ri
ct
of
Wa
sh
in
gt
on

Ai      Tinker AFB,  Ground         21 civ.    10 civ.    In-          9.5      1.3
r       OK           maintenance                          house
Fo                                                        MEO
rc
e
Ma
te
ri
al
Co
mm
an
d

Ai      Tyndall      Base           796 mil.   796 mil.   Contrac    130.6     88.4
r       AFB, FL      operating      238 civ.   221 civ.   tor
Co                   support &
mb                   aircraft
at                   maintenance
Co
mm
an
d

Ai      Andrews      Administrativ  8 civ.     8 civ.     Contrac      0.6      0.7
r       AFB, MD      e support for                        tor
Mo                   medical
bi                   records
li
ty
Co
mm
an
d

Ma
ri
ne
s

No
ne

DE
CA

De      Fort Lewis,  Shelf          44 civ.    44 civ.    Contrac      6.0      1.2
fe      WA           stocking                             tor
ns                   custodial
e                    receiving,
Co                   storage &
mm                   holding area
is
sa
ry
Ag
en
cy

De      San Onofre   Shelf          6 civ.     2 civ.     In-          0.8      0.1
fe      Marine       stocking                             house
ns      Corps Base,  custodial                            MEO
e       CA           receiving,
Co                   storage &
mm                   holding area
is
sa
ry
Ag
en
cy

DF
AS

De      Denver, CO   Facilities     279 civ.   92 civ.    In-         41.5     20.5
fe      Indianapoli  logistics and                        house
ns      s, IN        administratio                        MEO
e       Kansas       n services
Fi      City, MO
na      Cleveland,
nc      OH
e       Columbus,
an      OH
d
Ac
co
un
ti
ng
Se
rv
ic
e

Fi
sc
al
ye
ar
19
98

Ar
my

Ma      Redstone     Missile        13 mil.    13 mil.    In-          3.2      0.1
te      Arsenal, AL  maintenance    39 civ.    21 civ.    house
ri                                                        MEO
el
Co
mm
an
d

Na
vy

U.      San Diego,   Family         10 mil.    75 civ.    Contrac     15.7     10.1
S.      CA Three     service        78 civ.               tor
Pa      locations-   centers
ci      -
fi      N. Island,
c       32nd
Fl      Street, &
ee      Point Loma
t

Ai
r
Fo
rc
e

Ai      Columbus     Base           231 mil.   114 mil.   In-         37.2     21.4
r       AFB, MS      operating      110 civ.              house
Ed                   support                              MEO
uc
at
io
n
&
Tr
ai
ni
ng
Co
mm
an
d

Ai      Hanscom      Laboratory     1 mil.     1 mil.     In-          2.6      2.4
r       AFB, MA      support        14 civ.    6 civ.     house
Fo                   services                             MEO
rc
e
Ma
te
ri
el
Co
mm
an
d

Ai      Hanscom      Audio-visual   2 mil.     2 mil.     In-          2.5      2.2
r       AFB, MA                     18 civ.    9 civ.     house
Fo                                                        MEO
rc
e
Ma
te
ri
el
Co
mm
an
d

Ai      Kirtland     Precision      33 mil.    32 mil.    In-          4.5      5.3
r       AFB,         measurement    18 civ.               house
Fo      NM           equipment lab                        MEO
rc
e
Ma
te
ri
el
Co
mm
an
d

Ai      Wright-      Base           88 mil.    88 mil.    Contrac     40.4     57.6
r       Patterson    operating      411 civ.   406 civ.   tor
Fo      AFB, OH      support
rc
e
Ma
te
ri
el
Co
mm
an
d

Ai      Hanscom      Vehicle O&M    30 mil.    26 mil.    In-         10.1      2.7
r       AFB, MA                     34 civ.               house
Fo                                                        MEO
rc
e
Ma
te
ri
el
Co
mm
an
d

Ai      Tinker AFB,  Communication  48 mil.    69 mil.    Contrac      8.8      6.2
r       OK           functions      22 civ.               tor
Fo
rc
e
Ma
te
ri
el
Co
mm
an
d

Ai      Hill AFB,    Grounds        38 civ.    36 civ.    Contrac      4.7      3.4
r       UT           maintenance                          tor
Fo
rc
e
Ma
te
ri
el
Co
mm
an
d

Ai      Los Angeles  Education      13 mil.    13 mil.    In-          3.4      4.4
r       AFB, CA      services       22 civ.    5 civ.     house
Fo                                                        MEO
rc
e
Ma
te
ri
el
Co
mm
an
d

Ai      Robins AFB,  Audio-visual   39 civ.    5 civ.     In-         10.0      1.4
r       GA                                                house
Fo                                                        MEO
rc
e
Ma
te
ri
el
Co
mm
an
d

Ai      Robins AFB,  Military       4 mil.     4 civ.     In-          2.7     0.04
r       GA           family         9 civ.                house
Fo                   housing                              MEO
rc                   maintenance
e
Ma
te
ri
el
Co
mm
an
d

Ai      Onizuka      Utilities      4 mil.     4 mil.     In-          7.5      0.5
r       AFB,         plant          21 civ.    5 civ.     house
Fo      CA                                                MEO
rc
e
Sp
ac
e
Co
mm
an
d

Ai      Edwards      Base supply    223 mil.   211 mil.   Contrac     30.0     29.2
r       AFB,                        116 civ.   109 civ.   tor
Fo      CA
rc
e
Ma
te
ri
el
Co
mm
an
d

Ai      Hurlburt     Transient      11 mil.    11 mil.    Contrac      0.3      0.4
r       Field,       aircraft                             tor
Fo      FL           maintenance
rc
e
Sp
ec
ia
l
Op
er
at
io
ns
Co
mm
an
d

Ai      Patrick      Base           90 mil.    49 mil.    In-         13.3      6.2
r       AFB, FL      operating      28 civ.               house
Fo                   support                              MEO
rc                   communication
e                    s
Sp
ac
e
Co
mm
an
d

Ai      Falcon AFB,  Utilities      16 mil.    8 mil.     In-          4.3      0.4
r       CO           plant          5 civ.                house
Fo                                                        MEO
rc
e
Sp
ac
e
Co
mm
an
d

Ai      Vandenberg   Housing        14 civ.    6 civ.     In-          3.1      1.3
r       AFB, CA      management                           house
Fo                                                        MEO
rc
e
Sp
ac
e
Co
mm
an
d

Ai      McGuire      Military       19 civ.    19 civ     Contrac     10.1      7.1
r       AFB,         family                               tor
Fo      NJ           housing
rc                   maintenance
e
Mo
bi
li
ty
Co
mm
an
d

Ai      Vandenberg   Civil          8 civ.     7 civ      Contrac      1.0      0.3
r       AFB, CA      engineering                          tor
Fo                   (CE)
rc
e
Sp
ac
e
Co
mm
an
d

Ai      Vandenberg   CE: materiel   3 mil.     3 mil.     In-          1.3      0.1
r       AFB, CA      acquisition    8 civ.     4 civ.     house
Fo                                                        MEO
rc
e
Sp
ac
e
Co
mm
an
d

Ai      Grand Forks  Base           13 civ.    12 civ.    Contrac      2.8      1.3
r       AFB, ND      operating                            tor
Fo                   support
rc
e
Mo
bi
li
ty
Co
mm
an
d

Pa      Elmendorf    Power          41 civ.    34 civ.    Contrac     10.7      8.7
ci      AFB, AK      production                           tor
fi
c
Ai
r
Fo
rc
es

Ma
ri
ne
s

No
ne

DE
CA

De      Camp         Shelf          28 civ.    28 civ.    Contrac      3.2      0.5
fe      Pendleton    stocking                             tor
ns      Marine       custodial
e       Corps Base,  receiving,
Co      CA           storage &
mm                   holding area
is
sa
ry
Ag
en
cy

De      Kaneohe Bay  Shelf          17 civ.    17 civ.    Contrac      2.1      0.5
fe      Marine       stocking                             tor
ns      Corps Base,  custodial
e       HI           receiving,
Co                   storage &
mm                   holding area
is
sa
ry
Ag
en
cy

DF
AS

De      Ft. Lee, VA  Defense        240 civ.   165 civ.   In-         13.2     50.5
fe      Kelly AFB,   commissary                           house
ns      TX           vendor pay                           MEO
e
Fi
na
nc
e
an
d
Ac
co
un
ti
ng
Se
rv
ic
e
-----------------------------------------------------------------------------------
\a Civ = civilian; mil = military.  In some instances, the number of
positions reduced was greater than those competed for a variety of
reasons, such as counting the reduction in temporary employees when
they had been used to fully staff a function. 

\b AFB = Air Force Base. 

\c DECA = Defense Commissary Agency. 

\d DFAS = Defense Finance and Accounting Service. 




(See figure in printed edition.)Appendix III
COMMENTS FROM THE DEPARTMENT OF
DEFENSE
========================================================== Appendix II


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IV

NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C. 

Barry W.  Holman
Marilyn K.  Wasleski
David W.  Rowan
Marjorie L.  Pratt
David B.  Best

OFFICE OF THE GENERAL COUNSEL

John G.  Brosnan
B.  Behn Miller

CHICAGO FIELD OFFICE

Cheryl K.  Andrew
Neal H.  Gottlieb




RELATED GAO PRODUCTS
============================================================ Chapter 0

OMB Circular A-76:  Oversight and Implementation Issues
(GAO/T-GGD-98-146, June 4, 1998). 

Quadrennial Defense Review:  Some Personnel Cuts and Associated
Savings May Not Be Achieved (GAO/NSIAD-98-100, Apr.  30, 1998). 

Competitive Contracting:  Information Related to the Redrafts of the
Freedom From Government Competition Act (GAO/GGD/NSIAD-98-167R, Apr. 
27, 1998). 

Defense Outsourcing:  Impact on Navy Sea-Shore Rotations
(GAO/NSIAD-98-107, Apr.  21, 1998). 

Defense Infrastructure:  Challenges Facing DOD in Implementing
Defense Reform Initiatives (GAO/T-NSIAD-98-115, Mar.  18, 1998). 

Defense Management:  Challenges Facing DOD in Implementing Defense
Reform Initiatives (GAO/T-NSIAD/AIMD-98-122, Mar.  13, 1998). 

Base Operations:  DOD's Use of Single Contracts for Multiple Support
Services (GAO/NSIAD-98-82, Feb.  27, 1998). 

Defense Outsourcing:  Better Data Needed to Support Overhead Rates
for A-76 Studies (GAO/NSIAD-98-62, Feb.  27, 1998). 

Outsourcing DOD Logistics:  Savings Achievable but Defense Science
Board's Projections Are Overstated (GAO/NSIAD-98-48, Dec.  8, 1997). 

Financial Management:  Outsourcing of Finance and Accounting
Functions (GAO/AIMD/NSIAD-98-43, Oct.  17, 1997). 

Base Operations:  Contracting for Firefighters and Security Guards
(GAO/NSIAD-97-200BR, Sept.  12, 1997). 

Terms Related to Privatization Activities and Processes
(GAO/GGD-97-121, July 1997). 

Defense Outsourcing:  Challenges Facing DOD as It Attempts to Save
Billions in Infrastructure Costs (GAO/T-NSIAD-97-110, Mar.  12,
1997). 

Base Operations:  Challenges Confronting DOD as It Renews Emphasis on
Outsourcing (GAO/NSIAD-97-86, Mar.  11, 1997). 

Public-Private Mix:  Effectiveness and Performance of GSA's In-House
and Contracted Services (GAO/GGD-95-204, Sept.  29, 1995). 

Government Contractors:  An Overview of the Federal Contracting-Out
Program (GAO/T-GGD-95-131, Mar.  29, 1995). 

Government Contractors:  Are Service Contractors Performing
Inherently Governmental Functions?  (GAO/GGD-92-11, Nov.  18, 1991). 

OMB Circular A-76:  Legislation Has Curbed Many Cost Studies in
Military Services (GAO/GGD-91-100, July 30, 1991). 

OMB Circular A-76:  DOD's Reported Savings Figures Are Incomplete and
Inaccurate (GAO/GGD-90-58, Mar.  15, 1990). 


*** End of document. ***