GAO disputes savings reports

Auditors find Forest Service lacked data to prove it complied with spending limits

Restrictions won't apply

New restrictions on competitive sourcing handed down by Congress in December don’t apply to competitions between federal employees and AbilityOne nonprofit organizations, according to a new memo from the Bush administration. The AbilityOne program awards federal contracts to provide jobs for people with severe disabilities.

Agencies can use a streamlined approach to public/private job competitions under the administration’s competitive- sourcing rules if agencies award contracts through AbilityOne, the memo states.

That exception follows recently enacted legislation under which Congress provided protections for employees in competition with private contractors.

Lawmakers said the legislation was needed to ensure fairness in job competitions between contractors and government employees.

The streamlined competition process would allow agencies to determine whether nonprofit organizations could provide a commercial service more cost-effectively than the government, according to the Feb. 20 memo signed by Paul Denett, administrator for the Office of Management and Budget’s Office of Federal Procurement Policy.

If awarded a contract, the nonprofit organization would be the sole representative of the private sector in the agency’s comparison of costs between the public and private sectors, the memo states.

Nearly 43,000 people with disabilities work at more than 600 community-based nonprofit groups that sell products and services to the government through AbilityOne.

— Matthew Weigelt

The Bush administration’s competitive- sourcing policy took a hard smack from the Government Accountability Office less than three weeks after Office of Management and Budget officials publicized one agency’s success story about saving an estimated $100 million a year from that initiative.

The Agriculture Department’s Forest Service reported savings of $38 million from competitive sourcing based on three public/private job competitions between fiscal 2004 and 2006. However, the agency spent an estimated $40 million on transition costs in 2005 and 2006 to restructure its information technology infrastructure for one of the competitions.

That cost is $5 million more than the $35 million in savings that the agency reported to Congress, according to a GAO report issued Feb. 21.

Because the Forest Service lacked complete and reliable information on transition costs during those two years, the agency couldn’t prove it complied with statutory spending limits on competitive sourcing or that it accurately reported its savings to Congress, GAO auditors said.

Robin Nazzaro, director of natural resources and environment at GAO, said the service didn’t necessarily fail at competitive sourcing. However, she added, “we don’t know how well they did” because the agency failed to keep accurate data on the project.

Agencies need to have good planning, guidance and data to be successful at competitive sourcing, Nazzaro said. Otherwise, it is difficult to demonstrate savings or show that an agency improved its operations.

The Forest Service defended its efforts in a written response to the report. Abigail Kimbell, the Forest Service’s chief, said the agency might not have accounted for all costs and savings, but it had met OMB’s data-reporting requirements.

GAO’s “concerns may be in conflict with the current OMB guidance on what costs should and should not be included in these reports,” Kimbell said.

The Office of Federal Procurement Policy did not respond by press time to requests for comment on the auditors’ findings.

The GAO findings may prompt lawmakers to take further action against competitive sourcing, arguably the most controversial initiative on the President’s Management Agenda.

Sen. Daniel Akaka (D-Hawaii), chairman of the Homeland Security and Governmental Affairs Committee’s Federal Government Management, the Federal Workforce and the District of Columbia Subcommittee, often has questioned the advantages derived from competitive sourcing.

“This administration has pushed agencies to privatize federal jobs wherever possible, regardless of the real savings to the taxpayer,” Akaka said. “Contracting out should always be a last resort for agencies, without lowering the bar for determining if a job is inherently governmental.”

When OMB introduced the administration’s 2009 IT budget proposal Feb. 7, officials announced they had a good news story. The Army Corps of Engineers expected to save $500 million in the next five years by consolidating IT services. On that basis, the corps’ 2009 IT budget request was $221 million less than its budget for 2008.

The government saved about $7 billion by holding public/private job competitions between 2003 and 2006, according to a competitive-sourcing report that OMB sent Congress last May. In that document, OMB said it expects annual savings from competitive sourcing to exceed $1 billion.

Those savings would continue to grow as agencies conduct more competitions, control costs and improve the performance of some of its commercial activities, the report states.

However, some lawmakers are not convinced that the savings are real. Sen. Jeff Bingaman (D-N.M.), chairman of the Energy and Natural Resources Committee, said the Forest Service mismanaged its resources and potentially wasted tax dollar .

Another lawmaker, Sen. Ron Wyden (D-Ore.), chairman of the Energy and Natural Resources Committee’s Public Lands and Forests Subcommittee, said he intends to hold a hearing on competitive sourcing to explore whether it has hampered the Forest Service’s ability to fight wildfires.

“The Forest Service has been skirting the law to outsource jobs,” Wyden said.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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