GAO disputes savings reports

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.