Circular A-76 and the Moratorium on DOD Competitions: Background and Issues for Congress
Congressional research reportJan 16, 2013
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Circular A-76 and the Moratorium
on DOD Competitions:
Background and Issues for Congress
Valerie Ann Bailey Grasso
Specialist in Defense Acquisition
January 16, 2013
Congressional Research Service
7-....
www.crs.gov
R40854
CRS Report for Congress
Prepared for Members and Committees of Congress
Circular A-76 and the Current Moratorium on DOD Competitions
Summary
This report discusses the status of the ongoing moratorium on the conduct of Department of
Defense (DOD) public-private competitions under Office of Management and Budget (OMB)
Circular A-76, and potential issues for Congress.
OMB Circular A-76 is a federal executive branch policy for managing public-private
competitions to perform functions for the federal government. A-76 states that, whenever
possible, and to achieve greater efficiency and productivity, the federal government should
conduct competitions between public agencies and the private sector to determine who should
perform the work.
Congress passed legislation in P.L. 110-181, the National Defense Authorization Act (NDAA) for
FY2008 to suspend DOD public-private competitions under OMB Circular A-76. A governmentwide moratorium on the conduct of Circular A-76 competitions was extended through FY2012
through Section 733, Title VII (General Provisions, Government-wide Departments, Agencies
and Corporations) of Division C (Financial Services and General Government Appropriations
Act, 2012) of the Consolidated Appropriations Act of FY2012, P.L. 112-74. This moratorium
extended through September 30, 2012. The government-wide moratorium has been in place since
the passage of P.L. 111-8, the Omnibus Appropriations Act for FY2009.
There were at least two legislative amendments introduced during the 2nd session of the 112th
Congress that sought to suspend the moratorium on the conduct of future Circular A-76
competitions. Both amendments failed to pass.
Public debate over A-76 policy ignited in February 2007 as a result of a series of articles in the
Washington Post on the conditions at the former Walter Reed Army Medical Center in
Washington, DC. The articles led to several investigations, resignations of some senior Army
officials, congressional hearings, and legislation passed by Congress to prohibit the conduct of A76 competitions at military medical facilities. Congress passed legislation in P.L. 110-181, the
National Defense Authorization Act (NDAA) for FY2008 to suspend DOD public-private
competitions under OMB Circular A-76. Congress also passed legislation in P.L. 111-8, the
Omnibus Appropriations Act for FY2009, to halt the beginning of any new A-76 competitions
throughout the rest of the federal government. The government-wide moratorium has continued
to the present.
Congress had directed the completion of several reports before the moratorium can be lifted. The
congressionally required reports were the “Section 325” report which DOD was required to
submit to Congress within 30 days of the enactment of the FY2010 National Defense
Authorization Act, the DOD Inspector General’s report on issues involving DOD’s conduct of A76 competitions, and two Government Accountability Office (GAO) reports: one on DOD’s
conduct of public-private competitions, and the other on DOD’s inventory of service contracts.
These reports have been completed. Still, the moratorium has not been lifted.
Some policymakers have advocated for an end to the moratorium on the conduct of DOD
Circular A-76 competitions. Questions about the moratorium are largely centered around to what
extent the problems identified with Circular A-76 have been corrected, and the extent to which
the issues raised in the reports have been resolved to the satisfaction of Congress.
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Circular A-76 and the Current Moratorium on DOD Competitions
Contents
Background ...................................................................................................................................... 1
What is OMB Circular A-76? .................................................................................................... 1
Origin and History of OMB Circular A-76 ............................................................................... 1
The Debate over Circular A-76 ................................................................................................. 2
The A-76 Competition at the U.S. Army Walter Reed Army Medical Center .................... 2
How Does DOD Use Circular A-76? ........................................................................................ 2
Major Points of Contention over Circular A-76 Policy ............................................................. 3
Do Circular A-76 Studies Result in Savings to DOD? ........................................................ 3
Adequacy of Oversight Mechanisms .................................................................................. 4
Are Contractors Performing Functions That Are Inherently Governmental? ..................... 5
The Current Moratorium on the Conduct of Circular A-76 Competitions ...................................... 5
Legislative History on the Moratorium on Circular A-76 Competitions ................................... 5
Obama Administration Fiscal Year 2013 Budget Request......................................................... 8
Congressionally Mandated Reports on DOD’s Conduct of A-76 Competitions ............................. 8
Section 325 Report .................................................................................................................. 10
DOD’s Response to Section 325 ....................................................................................... 10
Other Issues Raised in DOD’s Report on Section 325 of the National Defense
Authorization Act for Fiscal Year 2010 (P.L. 111-84) .................................................... 10
GAO Assessment of DOD’s Section 325 Report .................................................................... 12
Other GAO Observations and Findings ............................................................................ 12
Issues for Congress ........................................................................................................................ 16
Summary of Selected Enacted Legislation .................................................................................... 17
Legislation Passed in the 112th Congress................................................................................. 17
H.R. 4310, the National Defense Authorization Act for FY2013 (P.L. 112-239) ............. 17
Legislation Passed in the 111th Congress ................................................................................. 20
Section 322 of H.R. 2647 (P.L. 111-288), the National Defense Authorization Act
for Fiscal Year 2010 ....................................................................................................... 20
Section 325 of H.R. 2647(P.L. 111-288), the National Defense Authorization Act
for Fiscal Year 2010 ....................................................................................................... 21
Section 323 of H.R. 6523(P.L. 111-383), the Ike Skelton National Defense
Authorization Act for Fiscal Year 2011 .......................................................................... 22
Legislation Passed in the 110th Congress................................................................................. 24
P.L. 110-181, the National Defense Authorization Act for Fiscal Year 2008 .................... 24
Summary of Selected Proposed Legislation in the 112th Congress................................................ 24
H.R. 5326, the Proposed Commerce, Justice Science and Related Agencies
Appropriations Act for FY2013 ........................................................................................... 25
Tables
Table 1. Congressionally Directed Reports Related to the Conduct of
Circular A-76 Competitions.......................................................................................................... 9
Table 2. Summary of DOD’s Responses and GAO’s Assessment of DOD’s Responses to
the Five Requirements in Section 325 of the National Defense Authorization Act for FY
2010 (P.L. 111-84) ...................................................................................................................... 13
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Table A-1. Summary of the DOD Inspector General’s Report No. D-2009-034 on
Provisions in Section 325 of the National Defense Authorization Act for Fiscal Year
2008 (P.L. 110-181) .................................................................................................................... 26
Appendixes
Appendix. Summary of DOD IG Report No. D-2009-034 ............................................................ 26
Contacts
Author Contact Information........................................................................................................... 27
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Background
What is OMB Circular A-76?
OMB Circular A-76 (A-76) is a federal policy that affects executive branch agencies. OMB
Circular A-76 and its definition of inherently governmental functions applies to all executive
departments named in 5 U.S.C. Section 101 and all independent establishments as defined in 5
U.S.C. Section 104. There are no exemptions. A-76 is a policy but does not have the force of
law.1
OMB Circular A-76 outlines a formal, complex, and often lengthy process for managing publicprivate competitions to perform functions for the federal government. A-76 states that, whenever
possible, and to achieve greater efficiency and productivity, the federal government should
conduct competitions between public agencies and the private sector to determine who should
perform the work. A-76 requires federal executive agencies to annually prepare lists of activities
considered both commercial and inherently governmental activities. In general, commercial
activities are subject to competition, while inherently governmental activities are not.2
Most federal government contracts are not awarded through Circular A-76 competitions, nor are
the majority of federal government contracts subject to public-private competitions. According to
the Government Accountability Office (GAO), A-76 competitions have over time represented a
small portion of the federal dollars spent on service contracts.3
Origin and History of OMB Circular A-76
The concept of A-76 first began as a statement of federal policy under the Bureau of the Budget
in the Eisenhower Administration, and developed into a formal A-76 policy statement in 1966.
The policy stated that the government would rely on the private sector for the performance of
commercial activities.4 OMB Circular A-76 has been revised several times, the latest revision in
2003. Competitive sourcing through A-76 was a major initiative identified in 2001 by the Bush
Administration’s Presidential Management Agenda. It was one of five government-wide
initiatives to improve the management and performance of the federal government.5 Some
Members of Congress were critical of the conduct of A-76 competitions under the Bush
1
For a discussion of the use of inherently governmental functions in Department of Defense operations, see CRS
Report R40641, Inherently Governmental Functions and Department of Defense Operations: Background, Issues, and
Options for Congress, by (name redacted), Valerie Ann Bailey Grasso, and (name redacted).
2
OMB issued a final policy letter on what constitutes an inherently governmental function. See Policy Letter 11-01,
Performance of Inherently Governmental and Critical Functions. Office of Management and Budget, Office of Federal
Procurement Policy, Federal Register Volume 76, Number 176, Monday, September 12, 2011, p. 56227-56242. The
effective date is October 12, 2011.
3
U.S. Government Accountability Office. Testimony of David M. Walker, Comptroller General of the United States,
before the U.S. Senate Subcommittee on Oversight of Government Manage, the Federal Workforce, and the District of
Columbia, Committee on Governmental Affairs, July 24, 2003; and Sawicky, Max B. “Show Me The Money: Evidence
is Sorely Lacking that the Bush Administration’s Proposed A-76 Rules for Contracting Will Bring Budget Savings.”
Briefing Paper from the Economic Policy Institute, October 9, 2003.
4
A commercial activity is defined as a recurring service that could be performed by the private sector. See the revised
Circular at http://www.whitehouse.gov/omb/circulars_a076_a76_incl_tech_correction/.
5
For a discussion on competitive sourcing statutes and other provisions affecting public-private competitions
throughout the federal government, see CRS Report RL32833, Sourcing Policy: Statutes and Statutory Provisions, by
(name redacted).
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Administration, and this criticism and ensuing debate over whether to conduct future A-76
competitions contributed to the current moratorium.
In accordance with statutory provisions, DOD suspended ongoing public-private competitions in
2008 and has not initiated any new public-private competitions since that time. President Obama
signed into law the FY2009 Omnibus Appropriations Act6 which suspended all new, governmentwide, OMB Circular A-76 studies through FY2009. (See section entitled “The Current
Moratorium on the Conduct of A-76 Competitions” for further information.)
The Debate over Circular A-76
The current moratorium on A-76 competitions is tied to the debate over Circular A-76 policy,
which can be viewed within a larger debate over the role of the federal government, and over
what functions the federal government should perform versus what functions the private sector
should perform. While it is difficult to generalize the range of views and opinions over the
application of the A-76, it is generally the case that federal employees and labor organizations
believe that A-76 is unfairly slanted in favor of the private sector, while private sector contractors
generally believe that federal government employees have an unfair advantage in A-76
competitions. Some proponents of the A-76 policy view it as a necessary mechanism for gaining
efficiencies in federal operations; on the other hand, some opponents view A-76 as adversarial,
expensive, and inefficient.
The A-76 Competition at the U.S. Army Walter Reed Army Medical Center
It should be noted that the public debate over A-76 policy was further ignited in February 2007 as
a result of a series of published articles in the Washington Post on reportedly poor conditions at
the Walter Reed Army Medical Center in Washington, DC.7 The journalists interviewed soldiers
and documented the living conditions and the frustration felt by many who were returning from
the war in Iraq. The articles concluded that many factors converged to create the events at Walter
Reed, including both administrative and bureaucratic failures. At that time, there were a number
of events occurring at the same time (returning veterans for services at Walter Reed, an A-76
competition for base support services that was underway, and the announcement that the base was
undergoing a base realignment and would be moving to the Bethesda Naval Hospital area.) The
ensuing public debate led to several investigations, resignations of some senior Army officials,
congressional hearings, and legislation passed by Congress to prohibit the conduct of A-76
competitions at military medical facilities. The moratorium at military medical facilities
ultimately led to a moratorium on the conduct of A-76 competitions government-wide.
How Does DOD Use Circular A-76?
DOD is the largest federal agency and has conducted more A-76 competitions than any other
federal agency. It has a unique workforce composed of civilians, military personnel, and
contractors, and the nature of DOD’s mission, some argue, make the conduct of public-private
competitions more complex than at other federal agencies. DOD has conducted A-76
6
P.L. 111-8.
Priest, Dana and Hull, Ann. “Soldiers Face Neglect, Frustration at Army’s Top Medical Facility.” Washington Post,
February 18, 2007, p. A01. For background and discussion of the Walter Reed Army Medical Center’s A-76
Competition, see CRS Report RL34140, Walter Reed Army Medical Center (WRAMC) and Office of Management and
Budget (OMB) Circular A-76: Implications for the Future, by Valerie Ann Bailey Grasso.
7
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competitions for activities such as food services, laundry services, building services, and public
works. However, there is concern among policymakers that some A-76 activities may be
considered inherently governmental, and should only be performed by federal employees.
DOD has relied on conducting A-76 competitions in an effort to achieve greater savings to
finance defense operations and support costs. Since the end of the Cold War, DOD had
substantially reduced the size of its force structure and sought to achieve additional cost savings
through a greater reliance on public-private competitions through Circular A-76.
Major Points of Contention over Circular A-76 Policy
In general, there are at least three major points of contention over the Circular A-76 policy and
process: (1) savings generated from the competitions, (2) the adequacy of oversight mechanisms,
and (3) the possible performance of “inherently governmental functions” by contractors. Each of
these points is discussed below.
Do Circular A-76 Studies Result in Savings to DOD?
OMB has reported that regardless of whether the federal government or the private contractor win
the competition, the act of competition alone generates cost savings from 10%-40%, on average.8
GAO has questioned the reliability of the DOD cost accounting systems in place to measure
savings generated from A-76 competitions. In testimony before Congress, the former GAO
Comptroller General identified challenges facing DOD in the conduct of A-76 competitions, as
discussed below.
DOD has been at the forefront of federal agencies in using the A-76 process and, since
the mid-to-late 1990s, we have traced DOD’s progress in implementing its A-76
program. The challenges we have identified hold important lessons that civilian agencies
should consider as they implement their own competitive sourcing initiatives. Notably:
selecting and grouping functions to complete were problematic, and determining and
maintaining reliable estimates of savings were difficult.9
In the past, some in Congress as well as some GAO officials have questioned whether the federal
government has the right management information systems in place to determine the amount of
savings from A-76 competitions. GAO has raised specific concerns over the reliability of the
Defense Commercial Activities Management Information Systems (DCAMIS) software data
system, the official DOD source for tracking A-76 program data.10 Two GAO reports have stated
that inaccurate guidance from OMB to Federal agencies has resulted in systematically overstated
savings and understated costs, and that Federal agencies have not collected complete and reliable
cost data related to the conduct of Circular A-76 competitions, making it difficult to determine
overall savings. Another GAO report has questioned whether DCAMIS can accurately report all
of the savings from A-76 competitions.11
8
Executive Office of the President, Office of Management and Budget. Competitive Sourcing: Conducting PublicPrivate Competition in a Reasoned and Responsible Manner. July 2003, p. 2.
9
U.S. General Accounting Office. Testimony of David M. Walker, Comptroller General of the United States, before
the U.S. Senate Subcommittee on Oversight of Government Manage, the Federal Workforce, and the District of
Columbia, Committee on Governmental Affairs, July 24, 2003.
10
The DCAMIS system of data collection is the official source for the tracking of costs and savings data on DOD’s
implementation of the A-76 program.
11
Government Accountability Office (GAO). Forest Service: Better Planning, Guidance, and Data Are Needed to
Improve Management of the Competitive Sourcing Program, GAO-08-195, January 22, 2008; GAO, Competitive
(continued...)
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The DOD Inspector General (IG) also questioned the reliability of the DCAMIS data. The DOD
IG found that the DCAMIS system users sometimes entered inaccurate data or omitted
documentation to support the data, and that the Navy, Army, and Air Force all used different
methods of developing A-76 baseline costs. The DOD IG concluded that Congress and the federal
government had received data that were unreliable, and that these data could not serve as the
basis of determining the costs and savings of the DOD Competitive Sourcing Program.12
In addition, some policymakers have questioned whether Circular A-76 competitions result in any
overall savings to the federal government, given how DOD tracks the costs of conducting
competitions. For example, in the introduction of S. 924 (111th Congress), a legislative initiative
known as the CLEAN-UP Act of 2009, a statement of findings questioned the performance
metrics that the government uses to calculate competition costs.13
Adequacy of Oversight Mechanisms
Decisions reached through the conduct of A-76 competitions result in a determination of who is
best to perform the work – the federal government or the private sector. Some policymakers have
argued that the government lacks the capacity to perform meaningful oversight over private
contractors. This view was discussed in the CLEAN-UP Act as described here:
The capacity of the Federal Government to oversee contractors and the OMB Circular A76 privatization process continues to decline, as demonstrated in scandals involving
reconstruction efforts in Iraq, Hurricane Katrina recovery efforts, and conditions at
Walter Reed Army Medical Center. The Government Accountability Office (GAO), in
two 2008 reports on the use of `competitive sourcing’ in different agencies, determined
that costs of A-76 privatization reviews often exceeded savings because of systematically
bad direction from the Office of Management and Budget.14
(...continued)
Sourcing: Greater Emphasis Needed on Increasing Efficiency and Improving Performance, GAO-04-367, February 27,
2004; and GAO, DOD Competitive Sourcing: Results of A-76 Studies Over the Past 5 Years, GAO-01-20, December
2000. Since 1979, DOD has used the DCAMIS software system to track A-76 costs and savings. The DCAMIS data are
the only official source for costs and savings data for DOD’s implementation of the A-76 program.
12
Department of Defense Office of Inspector General. Defense Infrastructure: DOD Reporting System for the
Competitive Sourcing Program (D-2006-028), November 22, 2005.
13
S. 924, Correction in Long-Standing Errors in Agency’s Unsustainable Procurements (CLEAN-UP) Act of 2009,
Section 3, Findings. The CLEAN-UP Act states: “The OMB Circular A-76 process retains fundamental inequities. The
minimum cost differential fails to take into account the quantifiable costs (such as hiring consultants and diverting
Federal employees from their regular duties) of carrying out A-76 privatization studies. All in-house bids are charged
12 percent of their personnel costs for overhead costs, even though a Department of Defense Inspector General study
revealed that overhead costs may not differ significantly, if at all, whether the functions are kept in-house or contracted
out, even in the case of studies of large numbers of Federal employees. Despite time limits established in law and as
part of the OMB Circular process A-76 process, privatization studies are allowed to continue indefinitely. The longer
an A-76 privatization study lasts, the more it costs to conduct, the less likely there are to be savings from that study,
and the more likely it will cost taxpayers more than it will save. In fact, given the costs and controversies associated
with the OMB Circular A-76 privatization process, OMB should be encouraging agencies to use internal reengineering
efforts, as OMB finally did, during the last year of George W. Bush’s presidency.”
14
S. 924, Correction in Long-Standing Errors in Agency’s Unsustainable Procurements (CLEAN-UP) Act of 2009,
Section 3, Findings.
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Are Contractors Performing Functions That Are Inherently Governmental?
Some policymakers in Congress are concerned that contractors may be performing functions that
are inherently governmental and should be performed by federal employees.15 Other
policymakers are concerned that Congress does not have a complete and detailed report of the
number and costs of contractors employed by the federal government, or the range of contractor
services.16
Some in Congress have raised concerns that DOD had failed to comply with a requirement of 10
U.S.C. 2330a to develop an inventory of activities performed by private contractors.17 The point
of the inventory is to help Congress identify how many contractors are employed by the federal
government, by federal agency, and what functions or activities they perform. In order to
determine if contractors are performing functions that are inherently governmental, federal
agencies must first know how many contractors are employed and what they do.
The Current Moratorium on the Conduct of
Circular A-76 Competitions
Currently, there is a moratorium on the conduct of OMB Circular A-76 competitions that has been
extended through FY2012. The moratorium was extended through the passage of Section 733 of
H.R. 2055, the Consolidated Appropriations Act for FY2012 (P.L. 112-74).18 This moratorium
prohibits the conduct of all public-private competitions pursuant to OMB Circular A-76
throughout the federal government. This moratorium is consistent with Section 2461 of Title 10,
United States Code (USC), which prohibits the conversion of any work currently performed (or
designated for performance) by civilian personnel to contract performance, unless certain
conditions are met.19
Legislative History on the Moratorium on
Circular A-76 Competitions
Congress passed legislation in January 2008 to suspend DOD public-private competitions under
OMB Circular A-76 and again in March 2009 to halt the beginning of any new A-76 competitions
throughout the rest of the federal government. Since 2008, the moratorium has been extended. No
15
See Section 939 of H.Rept. 112-78, the proposed National Defense Authorization Act for Fiscal Year 2012.
U.S. Senate. Letter from Senator Claire McCaskill, Chairman, Subcommittee on Readiness and Management
Support, to the Honorable Frank Kendall, Acting Under Secretary of Defense for Acquisition, Technology, and
Logistics, October 21, 2011.
17
U.S. House of Representatives. Letter from Representative Howard McKeon, Chairman, House Armed Services
Committee, and Representative Adam Smith, ranking Member of the House Armed Services Committee, to the
Honorable Leon E. Panetta, Secretary of Defense, November 14, 2011.
18
Sec.733. None of the funds appropriated or otherwise made available by this or any other Act may be used to begin
or announce a study or public-private competition regarding the conversion to contractor performance of any function
performed by Federal employees pursuant to Office of Management and Budget Circular A-76 or any other
administrative regulation, directive, or policy. P.L. 112-74 was signed into law on December 23, 2011, and extended
through September 30, 2012.
19
http://www.gpo.gov/fdsys/pkg/USCODE-2011-title10/html/USCODE-2011-title10-subtitleA-partIV-chap146sec2461.htm. 10 USC 2461 prohibits the conversion of activities, performed by DOD employees, to performance by
contractor employees unless the conversion is based on a public-private competition.
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new competitions have taken place since the moratorium has been in place. A summary of
enacted legislation related to this moratorium is listed below.
•
In Section 325 of the NDAA for FY2008, Congress prohibited the Office of Management
and Budget (OMB) and the Secretary of Defense from taking steps to “direct or require
the Secretary of Defense or the Secretary of a military department to prepare for,
undertake, continue, or complete a public-private competition or direct conversion of a
Department of Defense function to performance by a contractor under OMB Circular A76, or any other successor regulation, directive, or policy,” through September 30, 2008;20
•
In Sections 212 and 737 of the Omnibus Appropriations Act for FY2009,
Congress prohibited the initiation of any new public-private competitions under
OMB Circular A-76 through September 30, 2009. Section 737 of the bill
prohibited the use of appropriated funds (any funds from this statute, the FY2009
Consolidated Omnibus Act or any other Act) for conducting OMB Circular A-76
competitions government-wide. The effect of this provision was that no funds
could be used to begin or announce a public-private competition under OMB
Circular A-76;21
In Section 735 of the Consolidated Appropriations Act FY2010, Congress
imposed a government-wide moratorium, prohibiting certain federal agencies
from initiating or announcing a new public-private competition under OMB
Circular A-76 through September 30, 2010;22
In Section 325 of the NDAA for FY2010, Congress suspended all ongoing
public-private competitions being conducted by the Department of Defense
pursuant to OMB Circular A-76 , and established a review and approval process
for recommencing such competitions;23
In Sections 322(c) and 325 (c) of the NDAA for FY2010, Congress required
GAO to assess DOD’s report on public-private competitions under Circular A-76,
and DOD’s use of its authority to extend the 24-month time limit on the conduct
of A-76 competitions;24
In Section 8117 of the Department of Defense Appropriations Act for FY2010,
Congress prohibited the spending of any FY2010 funds to conduct public-private
competitions under OMB Circular A-76 through September 30, 2010;25
•
•
•
•
20
P.L. 110-181 was signed into law January 28, 2008.
P.L. 111-8 was signed into law March 11, 2009.
22
P.L. 111-117 was signed into law December 16, 2009. The Consolidated Appropriations Act for FY2010 does not
apply to DOD. See P.L. 111-118, DOD Appropriations Act for FY2010.
23
H.R. 2647, the National Defense Authorization Act for FY2010 (P.L. 111-84), was signed into law on October 28,
2009.
24
P.L. 111-84, signed into law October 28, 2009.
25
H.R. 3326, the Department of Defense Appropriations Act for FY2010 (P.L. 111-118) was signed into law on
December 19, 2009. Section 8117 reads: (a) Prohibition on Conversion of Functions Performed by Federal Employees
to Contractor Performance- None of the funds appropriated or otherwise made available by this Act, or that remain
available for obligation for the Department of Defense from the Consolidated Security, Disaster Assistance, and
Continuing Appropriations Act, 2009 (P.L. 110-329), the American Recovery and Reinvestment Act of 2009 (P.L. 1115), and the Supplemental Appropriations Act, 2009 (P.L. 111-32), may be used to begin or announce the competition to
award to a contractor or convert to performance by a contractor any functions performed by Federal employees
pursuant to a study conducted under Office of Management and Budget (OMB) Circular A-76.
21
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•
•
•
In Section 323 of the Ike Skelton National Defense Authorization Act for
FY2011, Congress prohibited the Secretary of Defense from establishing any
quotas or goals for converting functions performed by DOD civilian employees
to performance by contractors, “unless such goal, target, or quota is based on
considered research and analysis, as required by section 235, 2330a, or 2463 of
Title 10, United States Code;”26
Additionally, Section 323 also required the Secretary of Defense to submit to the
congressional defense committees, no later than March 31, 2011, a report on the
conversion of functions to performance by DOD civilian employees made during
FY2010, including the basis and rationale for decisions reached, and the number
of contract employees whose functions were converted to performance by DOD
civilian employees (an inventory of contracts for services for FY2010);27
Section 323 also required GAO to complete an assessment of DOD’s report, and
report to Congress no later than 120 days after DOD submitted its related report
to Congress. GAO’s assessment was completed.28 GAO reported that DOD had
met the statutory requirements of conducting its review of public-private
competitions, but stated that there remained some concerns about other issues, as
described below:
While DOD’s report addressed the statutory requirements, concerns remain about some
of the issues on which the DOD IG and we have previously reported. For example,
DOD’s report stated that upgrades to the current system used to track data on publicprivate competitions have been made, but because of the moratorium, DOD has not
reviewed whether data reliability and accuracy actually has improved. Further, the report
discussed the overhead rate used in the cost comparisons and called for no change, even
though both the DOD IG and we have reported that the standard rate of 12% of labor
costs does not have a sound analytical basis, which leaves some uncertainty about
whether that rate may be understated or overstated for any given public-private
competition. DOD’s report recommended excluding preliminary planning from the
competition time limits. The report also recommended that DOD issue revised
comprehensive guidance that would incorporate various policy changes as well as best
practices that could improve the competitions. The report also recommends that the
moratorium on DOD’s use of public-private competitions be lifted.29
•
Section 8103 of P.L. 112-10, the Consolidated Appropriations Act for FY2011
prohibited federal agencies from initiating or announcing new public-private
competitions under OMB Circular A-76. There was one exception, as stated
below:
(b) Exception- the prohibition in subsection (a) shall not apply to the award of a function
to a contractor or the conversion of a function to performance by a contractor pursuant to
a study conducted under Office of Management and Budget (OMB) Circular A-76 once
26
Section 323. Prohibition on Establishing Goals or Quotas for Conversion of Functions to Performance by
Department of Defense Civilian Employees, P.L. 111-383, signed into law on January 7, 2011.
27
U.S. Department of Defense. Report to the Congressional Defense Committees on the Department of Defense’s
FY2010 In-sourcing Actions. Prepared by the Office of the Under Secretary of Defense for Personnel and Readiness,
Requirements and Strategic Integration Directorate, Requirements and Program & Budget Coordination Office,
September 2011.
28
GAO. National Defense: DOD Met Statutory Requirements for Public-Private Competitions.GAO-11-923R,
September 26, 2011, 18 p., at http://www.gao.gov/products/GAO-11-923R.
29
Ibid., p. 2.
Congressional Research Service
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Circular A-76 and the Current Moratorium on DOD Competitions
all reporting and certifications required by section 325 of the National Defense
Authorization Act for FY2010 (P.L. 111-84) have been satisfactorily completed.30
•
Also, Section 733 of P.L. 112-74, the Consolidated Appropriations Act for FY2012,
prohibited funds from being used to “begin or announce a study or public-private
competition regarding the conversion to contractor performance of any function
performed by Federal employees pursuant to Office of Management and Budget Circular
A-76 or any other administrative regulation, directive, or policy.”31
As a further reminder that the moratorium remained in place, the Acting Under Secretary of
Defense for Personnel and Readiness issued a reminder in a memorandum to DOD staff on
December 1, 2011. The memo reportedly stated that there continued to be a moratorium in place
that prohibited the conduct of public-private competitions and the conversion of any work
performed by civilian personnel to performance by contractors. The memo reportedly clarified the
statutory language in 10 U.S.C. 2461 which prohibits the conversion of work performed by
civilian personnel to performance by the private sector contractors without first conducting a
public-private competition.32
Obama Administration Fiscal Year 2013 Budget Request
The Obama Administration’s FY2013 budget request (as well as the FY2012 budget request) to
Congress sought to prohibit the conduct of future public-private competitions under OMB
Circular A-76, as described below.
SEC.727. None of the funds appropriated or otherwise made available by this or any
other Act may be used to begin or announce a study or public-private competition
regarding the conversion to contractor performance of any function performed by Federal
employees pursuant to Office of Management and Budget Circular A-76 or any other
administrative regulation, directive, or policy.33
Congressionally Mandated Reports on DOD’s
Conduct of A-76 Competitions
Congress has enacted legislation to require several reports to evaluate DOD’s conduct of A-76
competitions. These reports are listed in Table 1 below. The moratorium on the conduct of A-76
competitions cannot be lifted until all of these reports have been completed. A more detailed
discussion follows Table 1.
30
P.L. 112-10 was signed into law on April 15, 2011.
P.L. 112-74 the Consolidated Appropriations Act for FY2012, was signed into law on December 23, 2011.
32
The memorandum can be accessed at http://afgeunionblog.files.wordpress.com/2011/12/prohibition-on-convertingcertain-functions-to-contract-performance-1-dec-2011.pdf. Also, see Clark, Charles. Prohibition of Conversion of InHouse Work to Contractors. Government Executive, December 7, 2011, at http://www.govexec.com/dailyfed/1211/
120711cc2.htm.
33
See the White House. Budget Request for FY2013, General Provisions-Government Wide, Section 733, February
2012, at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/ggp.pdf., accessed on December 20,
2012. Also, see the White House. Budget Request for FY2012, General Provisions-Government Wide, Section 728,
February 2011, at http://www.gpo.gov/fdsys/pkg/BUDGET-2012-APP/pdf/BUDGET-2012-APP-1-2.pdf
31
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Circular A-76 and the Current Moratorium on DOD Competitions
Table 1. Congressionally Directed Reports Related to the Conduct of
Circular A-76 Competitions
Report
Required By
Report Title
Purpose of Report
Office of the Inspector
General. Report to Congress
on Section 325 of the National
Defense Authorization Act for
Fiscal Year 2008, Office of
Management and Budget
Influence Over DOD PublicPrivate Competitions. Report
No. D-2009-034,
To conduct a comprehensive
review of OMB’s influence over
DOD’s public-private
competitions under Circular A76.
P.L. 110-181, Section
325.
Completed,
December 15, 2008
(See Appendix A-1)
Report to the Congressional
Defense Committees on the
Department of Defense’s
Conduct of Public-Private
Competitions.
To review DOD policies with
regard to the conduct of
public-private competitions
under OMB Circular A76.
P.L. 111-84, Section
325.
Completed August
2011.
DOD Met Statutory Reporting
Requirements on Public-Private
Competitions. (Also referred
to as the “Section 325” report)
To review DOD’s statutory
reporting requirements on
public-private competitions,
and to assess DOD’s use of the
authority to extend the 24month time limit.
P.L. 111-84, Sections
322 (a), 322(c) and
325(c).
Completed
September 26, 2011.
Report to the Congressional
Defense Committees on the
Department of Defense’s
FY2010 Insourcing Actions
(DOD’s Inventory of Contract
Services for FY2010).
To review the Department of
Defense insourcing decisions
for Fiscal Year 2010.
P.L. 111-383, Sections
323.
Completed
September 2011.
GAO’s Assessment of DOD’s
Inventory for Contract Services
in FY2010.
To assess DOD’s Inventory of
Contract Services Report, and
report to Congress no later
than 120 days after DOD’s
report submission to Congress.
These reports are designed for
examining the size of the
contractor workforce, and
necessary to inform budgetary
and personnel decisions on the
composition of the DOD total
workforce. Since this report is
also tied to the moratorium on
the conduct of A-76
competitions, it appears that
the moratorium cannot be
lifted until the completion of
this report.
Sections 323 of the
Ike Skelton National
Defense
Authorization Act for
FY2011 (P.L. 111-383)
Completed February
2012.
Congressional Research Service
Status of Report
Also, Section 803(c)
of the National
Defense
Authorization Act for
Fiscal Year 2010
directs GAO to
report for 3 years on
the inventory of
activities performed
pursuant to contracts
for services that are
to be submitted by
the Secretary of
Defense, in 2010,
2011, and 2012,
respectively.
9
Circular A-76 and the Current Moratorium on DOD Competitions
Section 325 Report34
Section 325 of the National Defense Authorization Act for FY 2010 (P.L. 111-84) required DOD
to: (1) conduct a comprehensive review of A-76 policies that govern the conduct of public-private
competitions, (2) cease spending FY2010 funds for any competitions until the review was
completed, (3) publish in the Federal Register that the review was completed, (4) submit to the
congressional defense committees a report on the inventory of contracts for services (to include
the Secretary of each military department and the head of each Defense Agency) in compliance
with 10 U.S.C. 2330a, and (5) submit budget information on contract services in compliance with
10 U.S.C. 236. In addition, Section 325 required GAO to conduct an assessment, within 90 days
of the date when the DOD report was submitted to Congress, of DOD’s review and report any
findings, conclusions, or recommendations to Congress. DOD’s response to Section 325 was
released in June 2011. GAO’s assessment of DOD’s report (in response to Section 325) was
completed in February 2012.35
DOD’s Response to Section 325
The DOD report focused on the five issues raised in Section 325(b). These responses are also
summarized in Table 2.
(1) the status of the compliance of the Department with the requirement of 2461(a)(1) of
title 10, United States Code, as amended by section 321 of this Act;
(2) actions taken by the Secretary to address issues raised in the report of the Department
of Defense Inspector General numbered D-2009-034 and dated December 15, 2008;
(3) the reliability of systems in effect as of the date of the enactment of this Act to
provide comprehensive and reliable data to track and assess the cost and quality of the
performance of functions that have been subjected to a public-private competition;
(4) the appropriateness of the cost differential in effect as of the date of the enactment of
this Act for determining the quantifiable costs and the current overhead rates applied with
respect to such functions; and
(5) the adequacy of the policies of the Department of Defense in implementing the
requirements of section 2461(a) (4) of title 10, United States Code.36
Other Issues Raised in DOD’s Report on Section 325 of the National Defense
Authorization Act for Fiscal Year 2010 (P.L. 111-84)
DOD-wide Recommendations
In the conclusion of the report, OUSD (P&R) recommended that DOD develop policies to
improve the A-76 competitive sourcing policy and process. Three specific recommendations are
put forth as department-wide, cross-cutting policies to be integrated into a new approach to A-76
competitions, as described below.
34
See the Legislative Activity section of this report.
See the following GAO reports: DOD Needs to Better Oversee In-sourcing Data and Align In-sourcing Efforts with
Strategic Workforce Plan. GAO-12-319, February 2012, 34 p., at http://www.gao.gov/assets/590/588425.pdf, and DOD
Met Statutory Reporting Requirements on Public-Private Competitions. GAO-11-923R, September 26, 2011, 16 p., at
http://www.gao.gov/assets/590/585397.pdf.
36
Section 325 of P.L. 110-181, signed into law January 28, 2008.
35
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Circular A-76 and the Current Moratorium on DOD Competitions
•
•
•
That DOD provide incentives to managers to use the A-76 competition process
while providing centralized support to components, using the capabilities of the
Defense Acquisition University to improve the delivery and timeliness of
training, lowering the overall cost of competitions to the commands;
That DOD incorporate current guidance for determining the full cost of total
force manpower into the preliminary planning process for any future A-76
competition; and
That DOD modifies internal processes to provide more timely and collaborative
outcomes.37
DOD’s Recommendations to Congress
DOD concluded its report with two major recommendations to Congress: (1) lift the suspension
on A-76 competitions, and (2) exclude the preliminary planning process from the statutory time
limit for conducting the A-76 competition. The justifications for these recommendations were
described in excerpts from the DOD report.
The Department finds nothing in its review that requires a special provision restricting
public-private competition in DOD. The Department needs to rebuild a viable program,
align resources, and promulgate improved guidance. These must be informed
recommendations for improvement noted by the Congress, federal labor unions, the
private sector, and DOD IG and GAO audits. Joint oversight by the OUSD (P&R) and
the OUSD (AT&L) will ensure well-reasoned acquisition processes incorporate Total
Force management principles. Competitions nominated by commanders and managers
will be central to the success of future efforts. DOD will, of course, respect the
government-wide moratorium on public-private competition should it remain in effect
after the suspension is lifted. Any competitions following the lifting of the suspension
and the moratorium will be required to incorporate the preliminary recommendations and
best practices.
Legislative remedy to section 322 of P.L. 111-84, the National Defense Authorization
Act for Fiscal Year 2010, which modified section 2461 of Title 10, United States Code, is
critical to ensuring the success of future competitions. As noted in detail earlier in this
report, the management-level evaluation process associated with preliminary planning
may or may not result in a decision to conduct a public-private competition. The work
completed during this phase ensures that competitions are viable, and should not be
artificially “rushed” to complete all competition requirements during statutory time
limits. It is the OUSD (P&R)’s recommendation that the start date of the competition be
the public announcement date and the end date be the performance decision date.
In order to ensure appropriate accountability to all stakeholders for the preliminary
planning process, OUSD (P&R) recommends that the Department adopt a Navy best
practice and announce a Component’s preliminary planning intent to Congress. This
practice would establish that a preliminary planning effort “starts” when the letter to
Congress is signed and dated for delivery, and includes an estimated review period time
frame to reasonably delineate the review. Such announcement would include a list of the
DOD functions, the related manpower mix criteria codes, locations of the functions, and
the related number of positions under review. This announcement would be
37
U.S. Department of Defense. Report to the Congressional Defense Committees on the Department of Defense’s
Conduct of Public-Private Competitions. Prepared by the Office of the Undersecretary of Defense for Personnel and
Readiness, Requirements and Strategic Integration Directorate, Requirements and Program & Budget Coordination
Office, June 2011, p. 19.
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Circular A-76 and the Current Moratorium on DOD Competitions
simultaneously communicated to the potentially affected workforce, concerned unions, as
well as interested private sector firms, both virtually and by formal letter notification.
Components would apply the Section 2461 of Title 10, United States Code requirement
to consult with civilian employees on a monthly basis during the preliminary planning
process to solicit, consider, and adjudicate their input to the process throughout the
planning period. Components would then be required to certify the results of preliminary
planning, formally supported by documentation, for the record. Documentation of these
results would include the acquisition feasibility, based on market research, of a decision
to pursue a public-private competition or not, contained in a memorandum signed by the
appropriate level of Component leadership.38
GAO Assessment of DOD’s Section 325 Report39
In addition to requiring the “Section 325” report, the National Defense Authorization Act for
FY201040 also required GAO to assess the report and review DOD’s authority to extend the 24month time limit on the conduct of public-private competitions.41 GAO conducted its review from
July through September 2011 and: (1) identified the methodology and data sources used by DOD
to review its A-76 policies, (2) assessed the extent to which DOD’s report addressed statutory
requirements and considered A-76 issues raised by GAO and others, and (3) analyzed documents,
regulations, statutes and other guidance DOD used in conducting its review.42
GAO concluded that DOD complied with the five statutory requirements in conducting its review
of public-private competitions. However, GAO raised a number of questions and identified
ongoing issues and challenges that continued to remain problematic, as described in excerpts of
the GAO report.43 (See Table 2, Summary of DOD’s Responses and GAO’s Assessment of
DOD’s Responses to the Five Requirements in Section 325 of the National Defense Authorization
Act for FY 2010 (P.L. 111-84) and GAO’s Assessment of DOD’s Response.)
Other GAO Observations and Findings
Preliminary Planning Phase for A-76 Competitions
Section 322 of the National Defense Authorization Act for FY2010 contained a provision that
limited the duration of an A-76 competition to 24 months, with a possible extension to 33 months
if DOD notifies Congress of the basis for the need for the extension.44 The DOD report
recommended that preliminary planning (which has generally occurred prior to the announcement
of an A-76 competition) not be included in the time-limits for conducting A-76 competitions. The
length of time to conduct a competition (from the date of the announcement of the start of the
competition to the announcement of the winner of the competition) could range from 20-22
38
Ibid., p. 20.
U.S. Government Accountability Office. DOD Met Statutory Reporting Requirements on Public-Private
Competitions. GAO-11-923R, September 26, 2011, 16 pages, at http://www.gao.gov/products/GAO-11-923R.
40
H.R. 2647, P.L. 111-84, was signed into law on October 28, 2009.
41
Another provision, Section 322 of the FY2010 NDAA, limited the duration of an A-76 competition to 24 months,
with a possible extension to 33 months if DOD notifies Congress of the basis for the need for the extension.
42
U.S. Government Accountability Office. DOD Met Statutory Reporting Requirements on Public-Private
Competitions. GAO-11-923R, September 26, 2011, 16 pages, at http://www.gao.gov/products/GAO-11-923R.
43
Ibid., p. 2.
44
GAO reported that DOD had not provided written notification to Congress to use the extended time period because
no new A-76 competitions have begun since the moratorium began.
39
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Circular A-76 and the Current Moratorium on DOD Competitions
months for a single function competition, contrasted with 31-35 months for a multifunction
competition. GAO concluded that more guidance on clarifying the preliminary planning phase
was needed before concluding that preliminary planning time should be excluded from statutory
time limits.45
Table 2. Summary of DOD’s Responses and GAO’s Assessment of DOD’s Responses
to the Five Requirements in Section 325 of the National Defense Authorization Act
for FY 2010 (P.L. 111-84)
Statutory Requirement
DOD’s Response
GAO’s Assessment46
The status of compliance
with the requirement of
2461(a) (1) of 10 USC 2461,
as amended by section 321
of this Act.
(10 USC 2461 requires that
a public-private competition
be held before conversion of
work performed by civilian
employees to performance
by private contractors.)
Due to the moratorium, DOD reported that
it was unable to respond to this requirement.
However, DOD stated that once the
moratorium on the conduct of public-private
competitions was lifted, the Department
would not have any “issues
implementing/complying with this recent
amendment.”47
GAO stated that DOD is now
required to conduct an A-76
competition for any commercial
activity performed by DOD civilian
employees, regardless of the
number of affected DOD civilian
positions. In the event the current
moratorium on the conduct of A-76
competitions is lifted, GAO states
that DOD reports that it will not
have any issues with the current
requirement.
Actions taken by the
Secretary to address issues
raised in the DOD Inspector
General report (D-2009-034,
December 15, 2008). (On
December 15, 2008, the
DOD Inspector General
issued a report to Congress
in accordance with the
requirements of the National
Defense Authorization Act
for FY 2008.
For a discussion of DOD’s response to issues
raised in the DOD Inspector General report
(D-2009-034), see Table A-1.
GAO stated that the DOD
Inspector General identified several
areas of concern, consistent with
GAO’s past findings, that if
addressed could potentially offer
some improvement to the conduct
of future A-76 competitions. GAO
identified best practices that could
improve DOD’s conduct of publicprivate competitions. These best
practices are grouped into four
categories: (1) Building and
maintaining agency staff capable of
managing competitions; building the
in-house MEO, and overseeing the
implementation of competition
decisions (2) Centralizing
responsibility for conducting publicprivate competitions to increase
control and effectively use support
contractors to manage
competitions, (3) Establishing a basic
program infrastructure that would
oversee the program and create
45
Ibid., p. 11.
U.S. Government Accountability Office. DOD Met Statutory Reporting Requirements on Public-Private
Competitions. GAO-11-923R, September 26, 2011, p. 7, at http://www.gao.gov/products/GAO-11-923R. Responses
here were quoted from the GAO report.
47
U.S. Department of Defense. Report to the Congressional Defense Committees on the Department of Defense’s
Conduct of Public-Private Competitions. Prepared by the Office of the Undersecretary of Defense for Personnel and
Readiness, Requirements and Strategic Integration Directorate, Requirements and Program & Budget Coordination
Office, June 2011.
46
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Circular A-76 and the Current Moratorium on DOD Competitions
Statutory Requirement
DOD’s Response
GAO’s Assessment46
policies and procedures to ensure
that DOD competition policies and
directives are carried out, and (4)
Avoiding conflicts of interest and
protecting the integrity of the
public-private competition decisionmaking process.
The reliability of systems to
provide comprehensive and
reliable data, designed to
track and assess the cost and
quality of the performance of
functions that have been
subjected to a public-private
competition.
The Office of the Under Secretary of
Defense for Personnel and Readiness [OUSD
(P&R)] stated that the DOD Commercial
Activities Management Information System
(DCAMIS) was established to meet DOD’s
official reporting requirements on the
conduct and results of A-76 competition
decisions. DCAMIS has been used to collect,
maintain and track A076 competitions since
the early 1980s, and DOD states that the
system was updated in 2001 and 2005 to
meet the revised A-76 requirements. DOD
expressed confidence in DCAMIS and
disagreed with the findings of the November
2005 DOD Inspector General Report that
raised issues of system reliability.
Furthermore, OUSD (P&R) believed that the
conceptual framework for DCAMIS can be
expanded beyond just tracking public-private
competition data. OUSD (P&R)
recommended that DCAMIS be appropriately
resourced, with shared burden across
multiple stakeholders, and modified to serve
broader management needs, such as possibly
tracking in-sourcing efforts across the
Department, automating the Inherently
Governmental/Commercial Activity (IG/CA)
Inventory processes, and enabling compliance
with the requirement for the Inventory of
Contracts for Services.48
GAO stated that since 2002, DOD
has used DCAMIS as the system to
track the results of A-76
competitions. GAO stated that it
has previously reported on various
problems with the accuracy and
completeness of the data contained
in the DCAMIS system, and has
recommended previously that DOD
develop guidance for making needed
improvements. According to GAO,
DOD agreed to make
improvements and has reported
that changes have been made to the
system, but no additional reviews of
DCAMIS have occurred since the
implementation of the
improvements. However, DCAMIS
was taken offline in May 2011 due
to the moratorium, and a Center
for Naval Analyses study to address
the reliability of DCAMIS was
suspended after DCAMIS was taken
offline.
The appropriateness of the
cost differential in effect as
of the date of the enactment
of this Act for determining
the quantifiable costs and the
current overhead rates
applied with respect to such
functions.
The OUSD (P&R) review asserted that the
cost differential represents an appropriate
methodology to ensure the government is
not changing sources (i.e., government to
private sector) based on a minimal savings
projection. According to OUSD (P&R), in
2007, Congress changed the Circular’s
method for applying the cost differential, so
that it no longer permits the application of
the conversion differential when the
incumbent source is the private sector. This
differential cost is now only added to the
contractor’s cost proposal when the
GAO stated the following: “In our
past work, we reported that the
standard 12% rate for general and
administrative overhead was
adopted by OMB for all
competitions government wide,
leaving some doubts as to how
closely this rate matched actual
overhead costs on a site-by-site,
activity-by-activity, or agency-byagency basis. We noted in our
report that OMB established this
standard rate in response to private
48
U.S. Department of Defense. Report to the Congressional Defense Committees on the Department of Defense’s
Conduct of Public-Private Competitions. Prepared by the Office of the Undersecretary of Defense for Personnel and
Readiness, Requirements and Strategic Integration Directorate, Requirements and Program & Budget Coordination
Office, June 2011, p. 12.
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Circular A-76 and the Current Moratorium on DOD Competitions
Statutory Requirement
The adequacy of the policies
of the Department of
Defense in implementing the
requirements of section
DOD’s Response
GAO’s Assessment46
incumbent source is the government. Since it
can no longer be subtracted from the
contractor’s cost proposal when the
incumbent is a private sector contractor,
conversions from contract performance to
government performance have no conversion
differential. This means, theoretically, a
conversion can be made even if there is less
than one dollar cost difference, providing an
advantage to the public sector.
DOD’s Office of Installations & Environment
provided updated guidance to DOD
components on the application of overhead
costs based on the results of a detailed study
by the Center for Naval Analyses (CNA)
regarding overhead definitions and
methodologies used in both the private and
public sectors. The outcome of this study is
germane in that neither the public nor private
sector has a commonly accepted definition
for overhead. Based on the study, I&E
developed clarifying guidance to consistently
define the calculation of overhead for the
public sector with commonly held accounting
practices of the private sector.
OUSD (P&R) did not find a need for any
significant changes at this time to the
conversion differential but plans to review
recommendations made by various
stakeholders to determine if further
refinements would be beneficial.49
sector concerns that federal
agencies were not properly
recognizing overhead in their cost
of performance and to reduce the
administrative burden of estimating
general and administrative overhead
cost because of difficulties in
obtaining accurate information on
the full cost of government
programs. Our past work
acknowledged the difficulty of
obtaining reliable cost data that
could provide a sound basis for an
overhead rate, but we concluded
that until actual overhead costs are
used to develop a more meaningful
standard overhead rate, the
magnitude of savings expected from
public-private competitions will be
imprecise and competition decisions
could continue to be controversial.
We recommended that OMB and
DOD develop a methodology to
determine appropriate overhead
rates. The agencies did not agree
with our recommendation.
Similarly, the DOD IG reported in
March 2003 that the standard 12%
rate was not a fair estimate for
calculating general and
administrative overhead costs.
DOD officials we met with in
August 2011 stated that DOD is
reviewing the procedures used to
estimate and compare costs of
different configurations of military
and DOD civilian staffing with the
cost of service contracts. The
review is intended to help make
DOD workforce mix decisions and
could better inform DOD regarding
the methodologies that might be
used to compute more accurate
overhead cost estimates in publicprivate competitions.”50
DOD stated that departments, components,
bases and installations may choose to review
work that may currently be, or previously has
been, within the scope of the Most-Efficient
GAO reported that DOD stated
that, in the Department’s opinion,
its policies are adequate to
implement this statutory provision.
49
Ibid., p. 14.
U.S. Government Accountability Office. DOD Met Statutory Reporting Requirements on Public-Private
Competitions. GAO-11-923R, September 26, 2011, p. 79, at http://www.gao.gov/products/GAO-11-923R.
50
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Circular A-76 and the Current Moratorium on DOD Competitions
Statutory Requirement
2461(a) (4) of title 10,
United States Code.51
DOD’s Response
GAO’s Assessment46
Organization (MEO).52 Also, DOD reported
that due to the current moratorium and a
decreased emphasis on A-76 competitions, a
draft revision of proposed changes in publicprivate competition policy had been
suspended. (U.S. Department of Defense.
Report to the Congressional Defense
Committees on the Department of Defense’s
Conduct of Public-Private Competitions.
Prepared by the Office of the Undersecretary
of Defense for Personnel and Readiness,
Requirements and Strategic Integration
Directorate, Requirements and Program &
Budget Coordination Office, June 2011, p. 14)
However, GAO reports a March
2008 DOD policy memorandum
recognizes that the individual
military components may use their
own discretion to independently
determine which commercial
activities may be subject to A-76
competition during the budget and
review process. DOD’s report
recommends for clarifying guidance
on the application of the statutory
limitations on re-competitions when
considering work previously subject
to an A-76 competition.
Sources: Report to the Congressional Defense Committee’s on DOD’s Conduct of Public-Private
Competitions, June 2011, and GAO-11-923R, DOD Public-Private Competitions, September 26, 2011.
Issues for Congress
Some in Congress view the current moratorium period as an opportunity to examine the OMB
Circular A-76 policy, to review the inventory of contracted services to determine how much work
is contracted out to private contractors, and to ascertain whether contractors perform work that is
inherently governmental. Some others in Congress view the current moratorium as an
unnecessary restraint on achieving further efficiencies and cost-savings. While the issue of
continuing or suspending the moratorium is in debate, questions will likely continue to be raised
as to whether the federal government should continue to invest time and resources in conducting
future A-76 competitions.
Some potential oversight issues may include the following:
•
•
The DOD moratorium was imposed, in part, because of GAO and DOD Inspector
General reports which concluded that DOD components were unable to
demonstrate that A-76 competitions consistently resulted in savings to the
government. Some reports questioned whether there was complete and reliable
cost data related to the conduct of A-76 competitions that make it possible to
determine the overall savings to DOD. Some reports stated that if savings could
not be satisfactorily demonstrated, perhaps A-76 competitions should not resume.
The DOD Inspector General reported as early as 2003 that the standard 12% rate
was not a fair estimate for calculating general and administrative overhead costs
for A-76 competitions, and DOD officials who met with GAO in August 2011
51
Title 10, Section 2461 (a)(4) states that DOD is not required to conduct a “re-competition” at the end of the
performance period for the MEO.
52
The MEO is the staffing plan of the Agency Tender, developed to represent the agency’s most efficient and cost
effective organization. The MEO is required for a standard competition and may include a mix of government
personnel and MEO subcontracts. The Agency Tender is the agency management plan submitted in response to a
solicitation for a standard competition. The agency tender includes an MEO, agency cost estimate, MEO quality control
plan, MEO phase-in plan, and copies of any MEO subcontracts (with the private sector providers’ proprietary
information redacted). See Acronyms and Definitions, Circular A-76, revised May 29, 2003, at
http://www.whitehouse.gov/omb/circulars_a076_a76_incl_tech_correction/.
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•
•
•
stated that DOD would review the procedures used to estimate and compare costs
of different configurations of military, civilian, and contractors.
Should Congress give DOD an opportunity to better refine its methodologies
used to help make better decisions on the total workforce mix before lifting the
moratorium?
To what degree have the problems that led to the moratorium been resolved?
How would the OMB Circular A-76 process be any different today if the
moratorium were lifted?
Summary of Selected Enacted Legislation
Legislation Passed in the 112th Congress
H.R. 4310, the National Defense Authorization Act for FY2013 (P.L. 112-239)
In the Senate-proposed NDAA for FY2013 (S. 3254/H.R. 4310) one provision (Section 341) was
proposed that would require that
the Secretary of Defense shall begin the implementation of an efficiencies plan for the
civilian workforce and the service contractor workforce of the Department of Defense
which shall achieve savings in the funding for each such workforce over the period from
fiscal year 2012 through fiscal year 2017 that are not less, as a percentage of such
funding, than the savings in funding for military personnel achieved by the planned
reduction in military end strengths over the same period of time.53
Section 955 of H.R. 4310, the National Defense Authorization Act for FY2013, includes many of
the provisions contained in Section 341, and also requires that the Comptroller General review
DOD’s annual status reports, from FY2015 through FY2018, and submit a report to the
congressional defense committees not later than 120 days after the end of each fiscal year. Section
955 is described below.54
Section 955. Savings to be Achieved in Civilian Personnel Workforce and Service
Contractor Workforce of the Department of Defense
(a) Required Plan(1) IN GENERAL- The Secretary of Defense shall ensure that the civilian personnel
workforce and service contractor workforce of the Department of Defense are
appropriately sized to support and execute the National Military Strategy, taking into
account military personnel and force structure levels. Not later than 90 days after the date
of the enactment of this Act, the Secretary of Defense shall develop and begin to execute
an efficiencies plan for the civilian personnel workforce and service contractor workforce
of the Department of Defense.
(2) CONSISTENCY WITH OTHER POLICIES AND PROCEDURES- The Secretary
shall ensure the plan required under this subsection is consistent with the policies and
53
S. 3254, Section 341. Savings to Be Achieved In Civilian Workforce and Contractor Employee Workforce of the
Department of Defense.
54
Section 955. Savings to Be Achieved In Civilian Personnel Workforce and Service Contractor Workforce of the
Department of Defense. H.R. 4310, the National Defense Authorization Act for FY2013, was signed into law on
January 2, 2013 (P.L. 112-239).
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procedures required under section 129a of title 10, United States Code, as implemented
under the policies issued by the Under Secretary of Defense for Personnel and Readiness
for determining the most appropriate and cost-efficient mix of military, civilian, and
service contractor personnel to perform the missions of the Department of Defense.
(b) Savings- The plan required under subsection (a) shall achieve savings in the total
funding for each workforce covered by such plan over the period from fiscal year 2012
through fiscal year 2017 that are not less, as a percentage of such funding, than the
savings in funding for basic military personnel pay achieved from reductions in military
end strengths over the same period of time.
(c) Exclusions- In developing and implementing the plan required by subsection (a) and
achieving the savings percentages required by subsection (b), the Secretary of Defense
may exclude expenses related to the performance of functions identified as core or
critical to the mission of the Department, consistent with the workload analysis and risk
assessments required by sections 129 and 129a of title 10, United States Code. In making
a determination of core or critical functions, the Secretary shall consider at least the
following:
(1) Civilian personnel expenses for personnel as follows:
(A) Personnel in Mission Critical Occupations, as defined by the Civilian Human Capital
Strategic Plan of the Department of Defense and the Acquisition Workforce Plan of the
Department of Defense.
(B) Personnel employed at facilities providing core logistics capabilities pursuant to
section 2464 of title 10, United States Code.
(C) Personnel in the Offices of the Inspectors General of the Department of Defense.
(2) Service contractor expenses for personnel as follows:
(A) Personnel performing maintenance and repair of military equipment.
(B) Personnel providing medical services.
(C) Personnel performing financial audit services.
(3) Personnel expenses for personnel in the civilian personnel workforce or service
contractor workforce performing such other critical functions as may be identified by the
Secretary as requiring exemption in the interest of the national defense.
(d) Reports(1) INITIAL REPORT- Not later than 120 days after the date of the enactment of this
Act, the Secretary of Defense shall submit to the congressional defense committees a
report including a comprehensive description of the plan required by subsection (a).
(2) STATUS REPORTS- As part of the budget submitted by the President to Congress
for each of fiscal years 2015 through 2018, the Secretary shall include a report describing
the implementation of the plan during the prior fiscal year and any modifications to the
plan required due to changing circumstances. Each such report shall include a summary
of the savings achieved in such prior fiscal year through reductions in the military,
civilian, and service contractor personnel workforces, and the number of military,
civilian, and service contractor personnel reduced. In any case in which savings fall short
of the annual target, the report shall include an explanation of the reasons for such
shortfall.
(3) EXCLUSIONS- Each report under paragraphs (1) and (2) shall specifically identify
any exclusion granted by the Secretary under subsection (c) in the period of time covered
by the report.
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(e) Limitation on Transfers of Functions- The Secretary shall ensure that the savings
required by this section are not achieved through unjustified transfers of functions
between or among the military, civilian, and service contractor personnel workforces of
the Department of Defense. Nothing in this section shall be construed to preclude the
Secretary from exercising authority available to the Department under sections 129a,
2330a, 2461, and 2463 of title 10, United States Code.
(f) Sense of Congress- It is the sense of Congress that an amount equal to 30% of the
amount of the reductions in appropriated funds attributable to reduced budgets for the
civilian and service contractor workforces of the Department by reason of the plan
required by subsection (a) should be made available for costs of assisting military
personnel separated from the Armed Forces in the transition from military service.
(g) Service Contractor Workforce Defined- In this section, the term `service contractor
workforce’ means contractor employees performing contract services, as defined in
section 2330(c)(2) of title 10, United States Code, other than contract services that are
funded out of amounts available for overseas contingency operations.
(h) Comptroller General Review and Report- For each fiscal year from fiscal year 2015
through fiscal year 2018, the Comptroller General of the United States shall review the
status reports submitted by the Secretary as required by subsection (d)(2) to determine
whether the savings required by subsection (b) are being achieved in the civilian
personnel workforce and the service contractor workforce and whether the plan required
under subsection (a) is being implemented consistent with sourcing and workforce
management laws, including sections 129, 129a, 2330a, 2461, and 2463 of title 10,
United States Code. The Comptroller General shall submit a report on the findings of
each review to the congressional defense committees not later than 120 days after the end
of each fiscal year covered by this subsection.
Section 733 of P.L. 112-74, the Consolidated Appropriations Act for FY2012, prohibited funds
from being used to “begin or announce a study or public-private competition regarding the
conversion to contractor performance of any function performed by Federal employees pursuant
to Office of Management and Budget Circular A-76 or any other administrative regulation,
directive, or policy.”55
Section 8103 of P.L. 112-10, the Consolidated Appropriations Act for FY2011 prohibited federal
agencies from initiating or announcing new public-private competitions under OMB Circular A76, except when certain conditions are met.56 The exception is noted below.
b) Exception- The prohibition in subsection (a) shall not apply to the award of a function
to a contractor or the conversion of a function to performance by a contractor pursuant to
a study conducted under Office of Management and Budget (OMB) Circular A-76 once
all reporting and certifications required by Section 325 of the NDAA for Fiscal Year
2010 (P.L. 111-84) have been satisfactorily completed.
55
56
P.L. 112-74 was signed into law on December 23, 2011.
P.L. 112-10 was signed into law on April 15, 2011.
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Legislation Passed in the 111th Congress
Section 322 of H.R. 2647 (P.L. 111-288), the National Defense Authorization Act
for Fiscal Year 201057
Section 322 of the FY2010 NDAA contained a provision that limits the duration of an A-76
competition to 24 months, with a possible extension to 33 months if DOD notifies Congress the
basis for the need for the extension.
Section 322. Time Limitation on Duration of Public-Private Competitions
(a) Time Limitation- Section 2461(a) of title 10, United States Code, as amended by
section 321, is further amended by adding at the end the following new paragraph:
(5)(A) Except as provided in subparagraph (B), the duration of a public-private
competition conducted pursuant to Office of Management and Budget Circular A-76 or
any other provision of law for any function of the Department of Defense performed by
Department of Defense civilian employees may not exceed a period of 24 months,
commencing on the date on which the preliminary planning for the public-private
competition begins and ending on the date on which a performance decision is rendered
with respect to the function.
(B)(i) The Secretary of Defense may specify an alternative period of time for a publicprivate competition, which may not exceed 33 months, if the Secretary—
(I) determines that the competition is of such complexity that it cannot be completed
within 24 months; and
(II) submits to Congress, as part of the formal congressional notification of a publicprivate competition pursuant to subsection (c), written notification that explains the basis
of such determination.
(ii) The notification under clause (i) (II) shall also address each of the following:
(I) Any efforts of the Secretary to break up the study geographically or functionally;
(II) The Secretary’s justification for undertaking a public-private competition instead of
using internal reengineering alternatives;
(III) The cost savings that the Secretary expects to achieve as a result of the publicprivate competition;
(iii) If the Secretary specifies an alternative time period under this subparagraph, the
alternative time period shall be binding on the Department in the same manner and to the
same extent as the limitation provided in subparagraph (A).
C) The time period specified in subparagraph (A) for a public-private competition does
not include any day during which the public-private competition is delayed by reason of
the filing of a protest before the Government Accountability Office or a complaint in the
United States Court of Federal Claims up until the day the decision or recommendation of
either authority becomes final. In the case of a protest before the Government
Accountability Office, the recommendation becomes final after the period of time for
filing a request for reconsideration, or if a request for reconsideration is filed, on the day
the Government Accountability Office issues a decision on the reconsideration.
57
H.R. 2647, P.L. 111-84, was signed into law on October 28, 2009.
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(D) If a protest with respect to a public-private competition before the Government
Accountability Office or the United States Court of Federal Claims is sustained, and the
recommendation is final as described in subparagraph (C), and if such protest and
recommendation result in an unforeseen delay in implementing a final performance
decision, the Secretary of Defense may terminate the public-private competition or
extend the period of time specified for the public-private competition under subparagraph
(A) or subparagraph (B). If the Secretary decides not to terminate a competition, the
Secretary shall submit to Congress written notice of such decision. Any such notification
shall include a justification for the Secretary’s decision and a new time limitation for the
competition, which shall not exceed 12 months from the final decision and shall be
binding on the Department.
(E) For the purposes of this paragraph, preliminary planning with respect to a publicprivate competition begins on the date on which the Department of Defense obligates
funds for the acquisition of contract support, or formally assigns Department of Defense
personnel, to carry out any of the following activities:
Section 325 of H.R. 2647(P.L. 111-288), the National Defense Authorization Act
for Fiscal Year 201058
Section 325 of the FY2010 NDAA contained a provision that temporarily suspended all ongoing
public-private competitions being conducted by the Department of Defense pursuant to Office of
Management and Budget Circular A-76, and established a review and approval process for
recommencing such competitions. Here is the report language from Section 325.
Section 325. Temporary Suspension of Public-Private Competitions for
Conversion of Department of Defense Functions to Performance by a
Contractor
(a) Temporary Suspension- During the period beginning on the date of the enactment of
this Act59 and ending on the date that is 30 days after the date on which the Secretary of
Defense submits to the congressional defense committees the certification required under
subsection (d), no study or competition regarding a public-private competition for the
conversion to performance by a contractor for any function performed by Department of
Defense civilian employees may be begun or announced pursuant to 2461 of title 10,
United States Code, or otherwise pursuant to Office of Management and Budget Circular
A-76.
(b) Review and Report to Congress - During fiscal year 2010, the Secretary of Defense,
acting through the Under Secretary of Defense for Personnel Readiness, in consultation
with the Under Secretary for Acquisition, Technology, and Logistics and the Comptroller
of the Department of Defense, shall undertake a comprehensive review of the policies of
the Department of Defense with respect to the conduct of public-private competitions.
The Secretary shall submit to the congressional defense committees a report on such
review not earlier than June 15, 2010.60
58
H.R. 2647, P.L. 111-84, was signed into law on October 28, 2009.
This act was signed into Law on October 28, 2009.
60
U.S. Department of Defense. Report to the Congressional Defense Committees on the Department of Defense’s
Conduct of Public-Private Competitions. Prepared by the Office of the Undersecretary of Defense for Personnel and
Readiness, Requirements and Strategic Integration Directorate, Requirements and Program & Budget Coordination
Office, June 2011.
59
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The review, at a minimum, shall address—
(1) the status of the compliance of the Department with the requirement of 2461(a)(1) of
title 10, United States Code, as amended by section 321 of this Act;
(2) actions taken by the Secretary to address issues raised in the report of the Department
of Defense Inspector General numbered D-2009-034 and dated December 15, 2008;
(3) the reliability of systems in effect as of the date of the enactment of this Act to
provide comprehensive and reliable data to track and assess the cost and quality of the
performance of functions that have been subjected to a public-private competition;
(4) the appropriateness of the cost differential in effect as of the date of the enactment of
this Act for determining the quantifiable costs and the current overhead rates applied with
respect to such functions; and
(5) the adequacy of the policies of the Department of Defense in implementing the
requirements of section 2461(a) (4) of title 10, United States Code.
(c) Comptroller General Review- Not later than 90 days after the date on which the report
required under subsection (b) is submitted to the congressional defense committees, the
Comptroller General shall conduct an assessment of the review required under paragraph
(b) and shall submit to the congressional defense committees a report on the findings of
such assessment and any conclusions or recommendations of the Comptroller General
based on such assessment.
(d) Certification required- The Secretary of Defense shall publish in the Federal Register
and submit to the congressional defense committees certification that—
(1) the review required by subsection (b) has been completed, and that the 90-day period
during which the assessment of the Comptroller General is to be completed under
subsection (c) has expired;
(2) the Secretary of Defense has completed and submitted to the congressional defense
committees a complete inventory of contracts for services for or on behalf of the
Department in compliance with the requirements of subsection (c) of section 2330a of
title 10, United States Code;
(3) the Secretary of each military department and the head of each Defense Agency
responsible for activities in the inventory has initiated the review and planning activities
of subsection (e) of such section; and
(4) the Secretary of Defense has submitted budget information on contract services in
compliance with the requirements of section 236 of title 10, United States Code.
Section 323 of H.R. 6523(P.L. 111-383), the Ike Skelton National Defense
Authorization Act for Fiscal Year 2011
Section 323 of H.R. 6523, the Ike Skelton National Defense Authorization Act for FY2011,61
prohibited the use of the establishment of goals for quotas for conducting A-76 competitions. In
addition, Section 323 also required DOD and GAO to report to Congress on the inventory of
contracts for services, as described below.
61
H.R. 6523, P.L. 111-383, was signed into law on January 7, 2011.
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Section 323. Prohibition on Establishing Goals or Quotas for Conversion of
Functions to Performance by Department Of Defense Civilian Employees
(a) Prohibition.-The Secretary of Defense may not establish, apply, or enforce any
numerical goal, target, or quota for the conversion of Department of Defense functions to
performance by Department of Defense civilian employees, unless such goal, target, or
quota is based on considered research and analysis, as required by section 235, 2330a, or
2463 of title 10, United States Code.
(b) Decisions to Insource.-In deciding which functions should be converted to
performance by Department of Defense civilian employees pursuant to section 2463 of
title 10, United States Code, the Secretary of Defense shall use the costing methodology
outlined in the Directive-Type Memorandum 09-007 (Estimating and Comparing the Full
Costs of Civilian and Military Manpower and Contractor Support) or any successor
guidance for the determination of costs when costs are the sole basis for the decision. The
Secretary of a military department may issue supplemental guidance to assist in such
decisions affecting functions of that military department.
(c) Reports.-(1) Report to Congress.-Not later than March 31, 2011, the Secretary of
Defense shall submit to the congressional defense committees a report on the decisions
with respect to the conversion of functions to performance by Department of Defense
civilian employees made during fiscal year 2010. Such report shall identify, for each such
decision:
(A) the agency or service of the Department involved in the decision;
(B) the basis and rationale for the decision; and
(C) the number of contractor employees whose functions were converted to performance
by Department of Defense civilian employees.
(2) Comptroller General Review.-Not later than 120 days after the submittal of the report
under paragraph
(1) the Comptroller General of the United States shall submit to the congressional
defense committees an assessment of the report.
(d) Construction.-Nothing in this section shall be construed(1) to preclude the Secretary of Defense from establishing, applying, and enforcing goals
for the conversion of acquisition functions and other critical functions to performance by
Department of Defense civilian employees, where such goals are based on considered
research and analysis; or
(2) to require the Secretary of Defense to conduct a cost comparison before making a
decision to convert any acquisition function or other critical function to performance by
Department of Defense civilian employees, where factors other than cost serve as a basis
for the Secretary’s decision.62
62
Section 323 of H.R. 6523, P.L. 111-83, signed into law on January 7, 2011.
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Legislation Passed in the 110th Congress
P.L. 110-181, the National Defense Authorization Act for Fiscal Year 200863
Section 325. Restriction on Office of Management and Budget Influence Over
Department of Defense Public-Private Competitions
(a) Restriction on Office of Management and Budget- The Office of Management and
Budget may not direct or require the Secretary of Defense or the Secretary of a military
department to prepare for, undertake, continue, or complete a public-private competition
or direct conversion of a Department of Defense function to performance by a contractor
under Office of Management and Budget Circular A-76, or any other successor
regulation, directive, or policy.
(b) Restriction on Secretary of Defense- The Secretary of Defense or the Secretary of a
military department may not prepare for, undertake, continue, or complete a publicprivate competition or direct conversion of a Department of Defense function to
performance by a contractor under Office of Management and Budget Circular A-76, or
any other successor regulation, directive, or policy by reason of any direction or
requirement provided by the Office of Management and Budget.
(c) Inspector General Review(1) Comprehensive Review Required. The Inspector General of the Department of
Defense shall conduct a comprehensive review of the compliance of the Secretary of
Defense and the Secretaries of the military departments with the requirements of this
section during calendar year 2008. The Inspector General shall submit to the
congressional defense committees the following reports on the comprehensive review:
(A) An interim report, to be submitted by not later than 90 days after the date of the
enactment of this Act.
(B) A final report, to be submitted by not later than December 31, 2008.
(2) Inspector General Access. For the purpose of determining compliance with the
requirements of this section, the Secretary of Defense shall ensure that the Inspector
General has access to all Department records of relevant communications between
Department officials and officials of other departments and agencies of the Federal
Government, whether such communications occurred inside or outside of the
Department.
Summary of Selected Proposed Legislation in the
112th Congress
In the House Armed Services Committee report on H.R. 4310, an amendment was offered to
remove the moratorium preventing DOD from using OMB Circular A-76 to conduct publicprivate competitions. The amendment failed in a roll call vote, 25-36.64
63
64
Section 325 of P.L. 110-181 was signed into law on January 28, 2009.
Amendment 29 was offered by Representative E. Scott Rigell on May 9, 2012.
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H.Amdt. 1112 to H.R. 4310, was introduced on May 17, 2012. The amendment would have
reintroduced competition by ending the current moratorium on the conduct of Circular A-76
competitions, as described here. The amendment failed in a recorded vote, 209-211.
My amendment will strike the law that prevents the Secretary of Defense from utilizing
private sector competition to provide new products or services. It replaces those
restrictions with the ability to competitively bid out for new commercial products or
services and select the most cost-effective option. Further, it removes criteria that compel
the Pentagon to insource competitive contracts currently being performed.65
H.R. 5326, the Proposed Commerce, Justice Science and Related
Agencies Appropriations Act for FY2013
H.Amdt. 1056 to H.R. 5326, the Commerce, Justice, Science, and Related Agencies
Appropriations Act for FY2013, was introduced on May 8, 2012, and sought to strike a provision
(Section 212) which would prohibit the conduct of future Circular A-76 competitions for work
performed by employees of the Bureau of Prisons or of Federal Prison Industries, as described
below. The amendment failed to pass, 199-211.
Sec.212. None of the funds appropriated by this Act may be used to plan for, begin,
continue, finish, process, or approve a public-private competition under the Office of
Management and Budget Circular A 76 or any successor administrative regulation,
directive, or policy for work performed by employees of the Bureau of Prisons or of
Federal Prison Industries, Incorporated.66
65
House of Representatives, Congressional Record Full Text, National Defense Authorization Act for FY2013, May
17, 2012, Page H3050. H.Amdt. 1112 to H.R. 4310 was offered by Representative Mike Coffman on May 17, 2012.
The Coffman Amendment also appeared in H.Rept. 112-485.
66
H.Amdt. 1056 to H.R. 5326, the Commerce, Justice, Science, and Related Agencies Appropriations Act, 2013. The
amendment was offered by Representative Bill Huizenga.
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Appendix. Summary of DOD IG Report
No. D-2009-034
Table A-1. Summary of the DOD Inspector General’s Report No. D-2009-034 on
Provisions in Section 325 of the
National Defense Authorization Act for Fiscal Year 2008 (P.L. 110-181)
Issue Identified by the IG in
Report No. D-2009-034
Effect on the Conduct of A-76
Competitions
DOD’s Response to Issues
Raised by the IG
Lack of a dedicated staff whose
sole function is to conduct A-76
competitions, thus staff are
assigned to other additional duties
The report suggested that Circular A76 competitions put a strain on the
workforce and adversely affected the
mission of the organization.
OSD stated that it would not be
prudent use of department
resources to assign employees fulltime when they do not participate
in a full-time capacity.
Follow-on competitions before the
final performance of the Most
Efficient Organization (MEO) were
required by Circular A-76, but
new legislative amendments stated
that follow-on competitions were
no longer required
Some DOD officials suggested that the
cost of conducting the follow-on
competitions could negate savings
generated by the original competition;
another official felt that the savings
generated by the follow-on
competitions were minimal.
OSD stated that DOD components
should not focus on recompeting
MEOs but on fostering competition
within all of the work performed
regardless of the source or the
organization. Furthermore, these
competitions should be grouped in
such a way to strive for efficient
performance and cost-effectiveness.
The qualifications of the Agency
Tender Official (ATO) were
inconsistent across the military
services and fell short of the
requirements set forth in OMB
Circular A-76, and that Section
326 of P.L. 110-181 left open the
question of whether the ATO has
standing to file a GAO protest.
Some smaller bases found it difficult to
dedicate a single GS-13 employee as the
ATO (Agency Tender Official), and
removing a GS-13 level employee from
his/her primary position had a negative
effect on the overall mission of the
base. In one case, no GS-13 employees
worked in the functional area selected
for competition. Further, ATOs without
standing could not file protect and
created inconsistencies in the ability of
the government to compete against the
private sector.
OSD stated that ATOs play a
significant role in the conduct of A76 competitions, should meet
certain qualifications, and should be
routinely assigned to conduct A-76
competitions to allow the
individuals to grow in their skill and
competency levels. Base
commanders cannot serve as ATOs
as they will have oversight over the
selected service provider,
regardless of the outcome of the
competition.
Guidance on A-76 guidelines was
described as multi-faceted,
overlapping, confusing, and
untimely, making compliance
difficult particularly with the
methodology used for costing.
Congressionally enacted
restrictions on A-76 competitions
often changed every year.
Differing interpretations of the A-76
guidance at all levels and between OMB
and OSD made it difficult to keep up
with the changing nature of laws and
regulations, making compliance difficult.
OSD stated that DOD has issued
guidance to implement any
statutory obligations imposed by
Congress on the conduct of A-76
competitions, and that the Share A76! Website and the DOD A-76
Costing Help Desk are available to
answer costing policy questions and
to encourage that consistent costing
methodology is applied to all agency
cost estimates.
Support contractors hired to assist
in writing the Performance Work
Statement (PWS) ranged in
competency from adequate to
unsatisfactory. PWS teams
commented that the support
contractors were often hired
In some cases, it appears that the
apparent lack of confidence in the
selection of the support contractors,
coupled with (in some cases) the lack of
technical expertise of some of the
support contractors, created challenges
in writing the PWS, identifying
OSD stated that new guidance was
written titled “Interim DOD
Guidance on Competitive Sourcing
Program Support for Consultants”
and assigned to the OSD General
Counsel for coordination. This
guidance is consistent with the
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Issue Identified by the IG in
Report No. D-2009-034
Effect on the Conduct of A-76
Competitions
DOD’s Response to Issues
Raised by the IG
because they represented the
lowest cost contractor to the
government, not because they
were more technically competent.
workload requirements, and appeared
to make for a less efficient effort and
possibly, work product.
Federal Acquisition Regulation but
has been written for individuals not
trained in acquisition-related
matters.
Training in competitive sourcing
policy
The descriptions of the quality and
relevance of the competitive sourcing
training that officials received at bases
and installations was mixed – from
“generic, not specific enough,” “helpful,
worthwhile, and in-depth.” The quality
of the instruction was mixed, in one
case described as “inadequate” and in
another, “ill-timed.”
OSD stated that the services did
not request funding for competitive
sourcing training for FY2009, and
that due to the lack of a competitive
sourcing program, “any future
training would have to be
incorporated into consultant
support contracts.”
Firewalls (defined as a separation
between the PWS and MEO teams
established to avoid any
appearance of a conflict of
interest)
Firewalls increased the amount of
people needed to conduct a
competition, often resulting in a
duplication of effort, which sometimes
resulted in limiting critical
communication resulting in slowing
down the pace and outcome of the
competition.
OSD stated that the firewall
requirement was a result of the
GAO protest decision in “Navy vs.
Jones/Hill Venture” case in May
2002. OSD had developed DOD
Interim Guidance on Firewalls
which was in coordination with
OSD General Counsel to clarify
these roles.
Contracting Issues
Some base and installation officials
expressed concern with the inability to
acquire and retain competent
contracting officers, the lack of control
over the sometimes constant turnover
of contracting officers during the course
of a competition, sometimes resulting in
periods of time without an assigned
contracting officer; a limited number of
contracting officials, and the resulting
delays in establishing an acquisition
strategy for the competitions.
OSD stated that the DOD Office of
Competitive Sourcing did not
require bases and installations to
organize their competitive sourcing
offices in a specific manner and left
such decisions to their own
management purview. Within the
bases and installations, the Army
appeared to express the most
challenges in acquiring and
maintaining sufficient contracting
personnel and support.
Source: U.S. Department of Defense, Office of the Inspector General. Report to Congress on Section 325 of
the National Defense Authorization Act for Fiscal Year 2008, Office of Management and Budget Influence Over
DOD Public-Private Competitions. Report No. D-2009-034, December 15, 2008, 22 p. Some of the numerical
data in the report was redacted, thus making report analysis and interpretation difficult.
Author Contact Information
Valerie Ann Bailey Grasso
Specialist in Defense Acquisition
/redacted/@crs.loc.gov, 7-....
Congressional Research Service
27
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