Circular A-76 and the Moratorium on DOD
Competitions: Background and Issues for
Congress
Valerie Bailey Grasso
Specialist in Defense Acquisition
January 17, 2012
Congressional Research Service
7-5700
www.crs.gov
R40854
CRS Report for Congress
Pr
epared for Members and Committees of Congress
Circular A-76 and the Moratorium on DOD Competitions
Summary
This report discusses the current moratorium on the conduct of Department of Defense (DOD)
public-private competitions under Office of Management and Budget (OMB) Circular A-76 and
issues for Congress.
There is a long-standing public debate over the conduct of A-76 competitions. The policy of the
government relying on the private sector for the performance of commercial services was first
initiated by the Bureau of the Budget during the Eisenhower Administration. OMB Circular A-
76, first issued in 1966, defines federal policy for determining whether recurring commercial
activities should be performed by the private sector or federal employees. The Circular has been
revised several times; the latest revision was released in 2003.
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 A-
76 competitions at military medical facilities. Congress passed legislation in Public Law (P.L.)
110-181, the National Defense Authorization Act for Fiscal Year (FY) 2008 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. Section 733 of H.R. 2434, the proposed Financial Services and
General Government Appropriations Act for FY2012, would prohibit 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.
Congress has directed the completion of several reports before the moratorium can be lifted. The
congressionally-required reports are 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 A-76 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. All of these reports
have been completed except the GAO assessment on the inventory of service contracts.
Some policymakers advocate an end to the moratorium on the conduct of DOD 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 whether the congressionally
required reports have been completed and the issues resolved to the satisfaction of Congress.
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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? ........................................................................................ 3
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 A-76 Competitions.................................................... 5
Obama Administration Fiscal Year 2012 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).................................................... 11
GAO Assessment of DOD’s Section 325 Report .................................................................... 12
Other GAO Observations and Findings ............................................................................ 13
Issues for Congress ........................................................................................................................ 17
Summary of Selected A-76 Legislation Enacted ........................................................................... 18
Legislation Passed in the 112th Congress................................................................................. 18
Legislation Passed in the 111th Congress................................................................................. 18
Section 322 of H.R. 2647, the National Defense Authorization Act for Fiscal Year
2010 ............................................................................................................................... 18
Section 325 of H.R. 2647, the National Defense Authorization Act for Fiscal Year
2010 ............................................................................................................................... 20
Section 323 of H.R. 6523, the Ike Skelton National Defense Authorization Act for
Fiscal Year 2011 ............................................................................................................. 21
Legislation Passed in the 110th Congress................................................................................ 23
P.L. 110-181, the National Defense Authorization Act for Fiscal Year 2008.................... 23
Summary of Selected A-76 Legislative Proposals......................................................................... 24
Legislation Introduced in the 112th Congress .......................................................................... 24
Section 937. Modification of Temporary Suspension of Public-Private
Competitions for Conversion of Department of Defense Functions to
Contractor Performance. ................................................................................................ 24
Section 938. Preliminary Planning and Duration of Public-Private Competitions. .......... 24
Section 939. Conversion of Certain Functions from Contractor Performance to
Performance by Department of Defense Civilian Employees........................................ 25
Legislation Introduced in the 111th Congress .......................................................................... 27
The Correction of Long-Standing Errors in Agencies’ Unsustainable
Procurements (CLEAN-UP) Act of 2009 (S. 924)......................................................... 27
H.R. 3170, Financial Services and General Government Appropriations Act for
Fiscal Year 2010............................................................................................................. 27
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S. 1432, Financial Services and General Government Appropriations Act for
Fiscal Year 2010 ............................................................................................................ 28
Tables
Table 1. Congressionally Directed Reports Related to the Conduct of Circular A-76
Competitions................................................................................................................................. 9
Table 2. Summary of DOD’s Response 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 .................................................................................................................... 13
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) .................................................................................................................... 29
Appendixes
Appendix. Summary of DOD IG Report No. D-2009-034............................................................ 29
Contacts
Author Contact Information........................................................................................................... 31
Acknowledgments ......................................................................................................................... 31
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Circular A-76 and the Moratorium on DOD Competitions
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 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. 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 A-76
competitions compete functions or activities, not positions.
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 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
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 John R. Luckey, Valerie Bailey Grasso, and Kate M. Manuel.
2 OMB recently 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. 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; 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/.
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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
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 Act [Public Law (P.L). 111-8] which
suspended all new, government-wide, OMB Circular A-76 studies through FY2009. (See section
entitled “The Current Moratorium on the Conduct of A-76 Competitions” for further information
on this topic.)
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
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 poor conditions at the Walter Reed Army Medical
Center in Washington, DC.6 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. 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.
5 For a discussion on competitive sourcing statutes and other provisions affecting public-private competitions
throughout the federal government, see CRS Report RL32833, Competitive Sourcing Statutes and Statutory Provisions,
by L. Elaine Halchin.
6 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 Bailey Grasso.
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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
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 the 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.7
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.8
Congress and GAO 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
7 Executive Office of the President, Office of Management and Budget. Competitive Sourcing: Conducting Public-
Private Competition in a Reasoned and Responsible Manner. July 2003, p. 2.
8 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.
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tracking A-76 program data.9 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.10
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.11
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, 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.12
Adequacy of Oversight Mechanisms
Decisions reached through the conduct of A-76 competitions result in a performance decision 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.
9 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.
10 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
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.
11 Department of Defense Office of Inspector General. Defense Infrastructure: DOD Reporting System for the
Competitive Sourcing Program (D-2006-028), November 22, 2005.
12 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.”
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The capacity of the Federal Government to oversee contractors and the OMB Circular A-76
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.13
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.14 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.15
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.16 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 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. No new competitions have taken place since that
time.
• In Section 325 of the National Defense Authorization Act for Fiscal Year (FY) 2008,
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
13 S. 924, Correction in Long-Standing Errors in Agency’s Unsustainable Procurements (CLEAN-UP) Act of 2009,
Section 3, Findings.
14 See Section 939 of H.Rept. 112-78, the proposed National Defense Authorization Act for Fiscal Year 2012.
15 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.
16 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.
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a contractor under Office of Management and Budget Circular A-76, or any other
successor regulation, directive, or policy,” through September 30, 2008;17
• 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 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;18
• In Section 735 of the Consolidated Appropriations Act FY2010, Congress
imposed a government-wide moratorium, prohibiting any federal agency from
initiating or announcing a new public-private competition under OMB Circular
A-76 through September 30, 2010;19
• In Section 325 of the National Defense Authorization Act for FY2010, Congress
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;20
• In Sections 322(c) and 325 (c) of the National Defense Authorization Act 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;21
• 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;22
• 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
17 P.L. 110-181, signed into law January 28, 2008.
18 P.L. 111-8, signed into law March 11, 2009.
19 P.L. 111-117, signed into law December 16, 2009.
20 H.R. 2647, the National Defense Authorization Act for FY2010 (P.L. 111-84), was signed into law on October 28,
2009.
21 P.L. 111-84, signed into law October 28, 2009.
22 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. 111-
5), 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.
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considered research and analysis, as required by section 235, 2330a, or 2463 of
Title 10, United States Code;”23
• 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 decisions with
respect to 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).24
• Also, Section 323 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 is underway. Since this report is also linked to
the moratorium on the conduct of A-76 competitions, it appears that the
moratorium cannot be lifted until the completion of this report.25
• Section 8103 of P.L. 112-10, the Consolidated Appropriations Act for FY2011
prohibits federal agencies from initiating or announcing new public-private
competitions under OMB Circular A-76, unless all reporting and certification
requirements required by Section 325 of the National Defense Authorization Act
for FY2010 have been “satisfactorily completed.”26
• Also, Section 733 of H.R. 2434, the proposed Financial Services and General
Government Appropriations Act for FY2012, would prohibit 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.”27
In addition to these enacted legislative initiatives, a provision was introduced in the 112th
Congress to extend the government-wide moratorium through September 30, 2011. This
provision was included in the House and Senate versions of the FY2011 Financial Services and
23 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.
24 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.
25 P.L. 112-10 was signed into law on April 15, 2011. The purpose of this annual inventory of service contracts was to
determine whether work now being performed by private contractors should be insourced to federal employees. The
Department of Defense defines insourcing as the conversion of any contracted service to performance by DOD civilian
and/or military personnel. Insourcing is conceived as a vehicle to ensure that there is an appropriate balance of
contractors, military, and civilian personnel to execute DOD’s mission.
26 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 National Defense
Authorization Act for Fiscal Year 2010 (P.L. 111-84) have been satisfactorily completed.
27 H.R. 2434 was introduced in the House on July 7, 2011 by Representative JoAnn Emerson and placed on the
Appropriations Committee calendar.
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General Government Appropriations Act, but the bill was not enacted and the provisions were not
included in the various continuing resolutions passed by Congress for FY2011.28
On December 1, 2012, the Acting Under Secretary of Defense for Personnel and Readiness issued
a memorandum to DOD to reiterate that there is a current moratorium from conducting public-
private competitions and from converting any work performed by civilian personnel to
performance by contractors. The memo clarifies 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. 29
Obama Administration Fiscal Year 2012 Budget Request
The Obama Administration’s FY 2012 budget request to Congress sought to prohibit the conduct
of future public-private competitions under OMB Circular A-76, as described here.
SEC. 728. 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.30
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. The congressionally-required reports discussed below. 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. Following Table 1, some of these reports are discussed in
greater detail.
28 Section 734 of H.R. 3170 and Sections 740-741 of S. 3677, the House and Senate versions of the FY2011 Financial
Services and General Government Appropriations Act.
29 The memorandum can be accessed at http://afgeunionblog.files.wordpress.com/2011/12/prohibition-on-converting-
certain-functions-to-contract-performance-1-dec-2011.pdf. Also, see Clark, Charles. Prohibition of Conversion of In-
House Work to Contractors. Government Executive, December 7, 2011. Accessed online at
http://www.govexec.com/dailyfed/1211/120711cc2.htm.
30 The White House. Budget Request for FY2012, General Provisions-Government Wide, Section 728, February 2011.
Accessed online at http://www.gpo.gov/fdsys/pkg/BUDGET-2012-APP/pdf/BUDGET-2012-APP-1-2.pdf.
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Circular A-76 and the Moratorium on DOD Competitions
Table 1. Congressionally Directed Reports Related to the Conduct of Circular A-76
Competitions
Report Required
Report Title
Purpose of Report
By
Status of Report
Office of the Inspector
To conduct a comprehensive
P.L. 110-181, Section
Completed,
General. Report to Congress
review of OMB’s influence over 325.
December 15, 2008
on Section 325 of the National
DOD’s conduct of public-
(See Appendix A-1)
Defense Authorization Act for
private competitions under
Fiscal Year 2008, Office of
Circular A-76.
Management and Budget
Influence Over DOD Public-
Private Competitions. Report
No. D-2009-034,
Report to the Congressional
To review DOD policies with
P.L. 111-84, Section
Completed August
Defense Committees on the
regard to the conduct of
325.
2011.
Department of Defense’s
public-private competitions
Conduct of Public-Private
under OMB Circular A76.
Competitions.
DOD Met Statutory Reporting
To review DOD’s report on its P.L. 111-84, Sections
Completed
Requirements on Public-Private
statutory reporting
322(c) and 325(c).
Competitions.
requirements on public-private
competitions, and to assess
DOD’s use of the authority to
extend the 24-month time
limit.
Report to the Congressional
To review the Department of
P.L. 111-383, Sections
Completed
Defense Committees on the
Defense insourcing decisions
323.
September 2011.
Department of Defense’s
for Fiscal Year 2010.
FY2010 Insourcing Actions
(DOD’s Inventory of Contract
Services for FY2010).
GAO’s Assessment of DOD’s
To assess DOD’s report, and
Sections 323 of the
Not released.
Inventory for Contract Services report to Congress no later
Ike Skelton National
in FY2010.
than 120 days after DOD
Defense
submitted its report to
Authorization Act for
Congress. These data are
FY2011.
critical to 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.
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Circular A-76 and the Moratorium on DOD Competitions
Section 325 Report31
Section 325 of the National Defense Authorization Act for FY 2010 (P.L. 111-84) required DOD
to do the following: (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 an 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
submitted to Congress in September 2011.
DOD’s Response to Section 325
The DOD report focused on the five requirements of Section 325(b), summarized in Table 1.
(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.32
31 See Legislative Activity section of this report.
32 Section 325 of P.L. 110-181, signed into law January 28, 2008.
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Circular A-76 and the Moratorium on DOD Competitions
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.
• 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 modify internal processes to provide more timely and collaborative
outcomes.33
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
33 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 Moratorium on DOD Competitions
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 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.34
GAO Assessment of DOD’s Section 325 Report35
In addition to requiring the “Section 325” report, the National Defense Authorization Act for
FY201036 also required GAO to assess the report and review DOD’s authority to extend the 24-
month time limit on the conduct of public-private competitions.37 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. 38
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.39 (See Table 1, Summary of DOD’s Response to the Five Requirements in
34 Ibid, p. 20.
35 U.S. Government Accountability Office. DOD Met Statutory Reporting Requirements on Public-Private
Competitions. GAO-11-923R, September 26, 2011, 16 pages. Accessed online at http://www.gao.gov/products/GAO-
11-923R.
36 H.R. 2647, P.L. 111-84, was signed into law on October 28, 2009.
37 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.
38 U.S. Government Accountability Office. DOD Met Statutory Reporting Requirements on Public-Private
Competitions. GAO-11-923R, September 26, 2011, 16 pages. Accessed online at http://www.gao.gov/products/GAO-
11-923R.
39 Ibid, p. 2.
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Circular A-76 and the Moratorium on DOD Competitions
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
limits 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.40 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
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. 41
Table 2. Summary of DOD’s Response 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
Statutory Requirement
DOD’s Response GAO’s
Assessment42
The status of compliance
Due to the moratorium, DOD reported that
GAO stated that DOD is now
with the requirement of
it was unable to respond to this requirement.
required to conduct an A-76
2461(a)(1) of 10 USC 2461,
However, DOD stated that once the
competition for any commercial
as amended by section 321
moratorium on the conduct of public-private
activity performed by DOD civilian
of this Act.
competitions was lifted, the Department
employees, regardless of the
would not have any “issues
number of affected DOD civilian
(10 USC 2461 requires that
implementing/complying with this recent
positions. In the event the current
a public-private competition
moratorium on the conduct of A-76
be held before conversion of
amendment.”43
competitions is lifted, GAO states
work performed by civilian
that DOD reports that it will not
employees to performance
have any issues with the current
by private contractors.)
requirement.
Actions taken by the
for a discussion of DOD’s response to issues
GAO stated that the DOD
Secretary to address issues
raised in the DOD Inspector General report
Inspector General identified several
40 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.
41 Ibid, p. 11.
42 U.S. Government Accountability Office. DOD Met Statutory Reporting Requirements on Public-Private
Competitions. GAO-11-923R, September 26, 2011, p. 7. Accessed online at http://www.gao.gov/products/GAO-11-
923R. Responses here were quoted from the GAO report.
43 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.
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Circular A-76 and the Moratorium on DOD Competitions
Statutory Requirement
DOD’s Response GAO’s
Assessment42
raised in the DOD Inspector
(D-2009-034), see Table A-1
areas of concern, consistent with
General report (D-2009-034,
GAO’s past findings, that if
December 15, 2008). (On
addressed could potentially offer
December 15, 2008, the
some improvement to the conduct
DOD Inspector General
of future A-76 competitions. GAO
issued a report to Congress
identified best practices that could
in accordance with the
improve DOD’s conduct of public-
requirements of the National
private competitions. These best
Defense Authorization Act
practices are grouped into four
for FY 2008.
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 public-
private competitions to increase
control and effectively use support
contractors to management
competitions, (3) Establishing a basic
program infrastructure that would
oversee the program and create
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 decision-
making process.
The reliability of systems to
The Office of the Under Secretary of
GAO stated that since 2002, DOD
provide comprehensive and
Defense for Personnel and Readiness [OUSD
has used DCAMIS as the system to
reliable data, designed to
(P&R)] stated that the DOD Commercial
track the results of A-76
track and assess the cost and Activities Management Information System
competitions. GAO stated that it
quality of the performance of (DCAMIS) was established to meet DOD’s
has previously reported on various
functions that have been
official reporting requirements on the
problems with the accuracy and
subjected to a public-private
conduct and results of A-76 competition
completeness of the data contained
competition.
decisions. DCAMIS has been used to col ect,
in the DCAMIS system, and has
maintain and track A076 competitions since
recommended previously that DOD
the early 1980s, and DOD states that the
develop guidance for making needed
system was updated in 2001 and 2005 to
improvements. According to GAO,
meet the revised A-76 requirements. DOD
DOD agreed to make
expressed confidence in DCAMIS and
improvements and has reported
disagreed with the findings of the November
that changes have been made to the
2005 DOD Inspector General Report that
system, but no additional reviews of
raised issues of system reliability.
DCAMIS have occurred since the
implementation of the
Furthermore, OUSD(P&R) believed that the
improvements. However, DCAMIS
conceptual framework for DCAMIS can be
was taken offline in May 2011 due
expanded beyond just tracking public-private
to the moratorium, and a Center
competition data. OUSD(P&R)
for Naval Analyses study to address
recommended that DCAMIS be appropriately the reliability of DCAMIS was
resourced, with shared burden across
44 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 Moratorium on DOD Competitions
Statutory Requirement
DOD’s Response GAO’s
Assessment42
multiple stakeholders, and modified to serve
suspended after DCAMIS was taken
broader management needs, such as possibly
offline.
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.44
The appropriateness of the
The OUSD(P&R) review asserted that the
GAO stated the following: “In our
cost differential in effect as
cost differential represents an appropriate
past work, we reported that the
of the date of the enactment
methodology to ensure the government is
standard 12 percent rate for general
of this Act for determining
not changing sources (i.e., government to
and administrative overhead was
the quantifiable costs and the private sector) based on a minimal savings
adopted by OMB for all
current overhead rates
projection. According to OUSD(P&R), in
competitions government wide,
applied with respect to such
2007, Congress changed the Circular’s
leaving some doubts as to how
functions.
method for applying the cost differential, so
closely this rate matched actual
that it longer permits the application of the
overhead costs on a site-by-site,
conversion differential when the incumbent
activity-by-activity, or agency-by-
source is the private sector. This differential
agency basis. We noted in our
cost is now only added to the contractor’s
report that OMB established this
cost proposal when the incumbent source is
standard rate in response to private
the government. Since it can no longer be
sector concerns that federal
subtracted from the contractor’s cost
agencies were not properly
proposal when the incumbent is a private
recognizing overhead in their cost
sector contractor, conversions from contract of performance and to reduce the
performance to government performance
administrative burden of estimating
have no conversion differential. This means,
general and administrative overhead
theoretically, a conversion can be made even
cost because of difficulties in
if there is less than one dollar cost difference, obtaining accurate information on
providing an advantage to the public sector.
the full cost of government
programs. Our past work
DOD’s Office of Installations & Environment
acknowledged the difficulty of
provided updated guidance to DOD
obtaining reliable cost data that
components on the application of overhead
could provide a sound basis for an
costs based on the results of a detailed study
overhead rate, but we concluded
by the Center for Naval Analyses (CNA)
that until actual overhead costs are
regarding overhead definitions and
used to develop a more meaningful
methodologies used in both the private and
standard overhead rate, the
public sectors. The outcome of this study is
magnitude of savings expected from
germane in that neither the public nor private public-private competitions will be
sector has a commonly accepted definition
imprecise and competition decisions
for overhead. Based on the study, I&E
could continue to be controversial.
developed clarifying guidance to consistently
We recommended that OMB and
define the calculation of overhead for the
DOD develop a methodology to
public sector with commonly held accounting
determine appropriate overhead
practices of the private sector.
rates. The agencies did not agree
OUSD(P&R) did not find a need for any
with our recommendation.
significant changes at this time to the
Similarly, the DOD IG reported in
conversion differential but plans to review
March 2003 that the standard 12
recommendations made by various
percent rate was not a fair estimate
stakeholders to determine if further
for calculating general and
refinements would be beneficial.45
administrative overhead costs.
DOD officials we met with in
August 2011 stated that DOD is
45 Ibid, p. 14.
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Circular A-76 and the Moratorium on DOD Competitions
Statutory Requirement
DOD’s Response GAO’s
Assessment42
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 public-
private competitions.”46
The adequacy of the policies
DOD stated that departments, components,
GAO reported that DOD stated
of the Department of
bases and installations may choose to review
that, in the Department’s opinion,
Defense in implementing the
work that may currently be, or previously has its policies are adequate to
requirements of section
been, within the scope of the Most-Efficient
implement this statutory provision.
2461(a)(4) of title 10, United
Organization (MEO).48 Also, DOD reported
However, GAO reports a March
States Code.47
that due to the current moratorium and a
2008 DOD policy memorandum
decreased emphasis on A-76 competitions, a
recognizes that the individual
draft revision of proposed changes in public-
military components may use their
private competition policy had been
own discretion to independently
suspended. (U.S. Department of Defense.
determine which commercial
Report to the Congressional Defense
activities may be subject to A-76
Committees on the Department of Defense’s competition during the budget and
Conduct of Public-Private Competitions.
review process. DOD’s report
Prepared by the Office of the Undersecretary recommends for clarifying guidance
of Defense for Personnel and Readiness,
on the application of the statutory
Requirements and Strategic Integration
limitations on re-competitions when
Directorate, Requirements and Program &
considering work previously subject
Budget Coordination Office, June 2011, p. 14) 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.
(...continued)
46 U.S. Government Accountability Office. DOD Met Statutory Reporting Requirements on Public-Private
Competitions. GAO-11-923R, September 26, 2011, p. 79 Accessed online at http://www.gao.gov/products/GAO-11-
923R.
47 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.
48The 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. Accessed online at
http://www.whitehouse.gov/omb/circulars_a076_a76_incl_tech_correction/.
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Circular A-76 and the Moratorium on DOD Competitions
Issues for Congress
Some in Congress view the current moratorium period as an opportunity to study the A-76
competition 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. 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 previous GAO and DOD
Inspector General reports that concluded that DOD components were unable to
demonstrate that A-76 competitions consistently resulted in savings to the
government. Was there complete and reliable cost data related to the conduct of
A-76 competitions that make it possible to determine the overall savings to
DOD? If savings cannot be demonstrated, why should A-76 competitions
resume?
• The DOD Inspector General reported as early as 2003 that the standard 12
percent 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 stated that DOD is now reviewing the procedures used to estimate
and compare costs of different configurations of military and DOD civilian
staffing with the cost of service contracts. Should the lifting of the moratorium
occur before these financial decisions are resolved?
• DOD is prohibited from conducting new A-76 competitions until the DOD
inventory of contract services is completed and GAO had rendered its assessment
of the service contract inventory. DOD’s response to Section 325 was completed
in June 2011. Given the fact that the GAO has not completed its assessment of
DOD’s inventory, should Congress continue the moratorium until the GAO
assessment of the inventory is completed? To what degree has the inventory of
service contract requirements under National Defense Authorization Act for FY
2008 been implemented by DOD?
• 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?
Would the process be any different today if the moratorium were lifted?
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Circular A-76 and the Moratorium on DOD Competitions
Summary of Selected A-76 Legislation Enacted
Legislation Passed in the 112th Congress
Section 8103 of P.L. 112-10, the Consolidated Appropriations Act for FY2011 prohibits federal
agencies from initiating or announcing new public-private competitions under OMB Circular A-
76, except when the certain conditions are met.49
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 National Defense Authorization Act for
Fiscal Year 2010 (P.L. 111-84) have been satisfactorily completed.
Legislation Passed in the 111th Congress
Section 322 of H.R. 2647, the National Defense Authorization Act for Fiscal
Year 2010 50
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 public-
private 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
49 P.L. 112-10 was signed into law on April 15, 2011.
50 H.R. 2647, P.L. 111-84, was signed into law on October 28, 2009.
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Circular A-76 and the Moratorium on DOD Competitions
‘(II) submits to Congress, as part of the formal congressional notification of a public-private
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 public-private
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.
(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 public-
private 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:
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Section 325 of H.R. 2647, the National Defense Authorization Act for Fiscal
Year 2010 51
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
Act52 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, 2010.53
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
51 H.R. 2647, P.L. 111-84, was signed into law on October 28, 2009.
52 This Act was signed into Law on October 28, 2009.
53 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.
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(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, 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 FY2011,54
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.
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.
54 H.R. 6523, P.L. 111-383, was signed into law on January 7, 2011.
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(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.55
55 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 200856
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 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 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.
56 Section 325 of P.L. 110-181 was signed into law on January 28, 2009.
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Summary of Selected A-76 Legislative Proposals
Legislation Introduced in the 112th Congress
Section 733 of H.R. 2434, the proposed Financial Services and General Government
Appropriations Act for FY2012, would prohibit funds to begin or announce an A-76
competition.57
H.R. 2219, the DOD Appropriations Act for FY2012, would prohibit federal agencies from
initiating or announcing new public-private competitions under OMB Circular A-76, with some
exceptions.
H.R. 1540, the House-passed version of the National Defense Authorization Act for FY2012,
contains three provisions which would affect the conduct of public-private competitions under
OMB Circular A-76. The provisions are listed here.58
Section 937. Modification of Temporary Suspension of Public-Private
Competitions for Conversion of Department of Defense Functions to
Contractor Performance.
Section 325 of the National Defense Authorization Act for Fiscal Year 2010 (P.L.
111-84; 123 Stat. 2253) is amended--
(1) in subsection (a), by striking `Secretary of Defense submits to the congressional defense
committees the certification required under subsection (d)' and inserting `Comptroller
General submits to the congressional defense committees the assessment required under
subsection (c)'; and
(2) by striking subsection (d).
Section 938. Preliminary Planning and Duration of Public-Private
Competitions.
Section 2461(a)(5) of title 10, United States Code, is amended--
(1) in subparagraph (E)—
(A) by striking `, begins' and inserting `shall be conducted in accordance with guidance
and procedures that shall be issued and maintained by the Under Secretary of Defense for
Personnel and Readiness and shall begin';
(B) by inserting after `the date on which' the following: `a component of';
57 H.R. 2434 was introduced on July 7, 2011.
58 H.R. 1540, the House-passed version of the National Defense Authorization Act for FY2012, was introduced on
April 14, 2011, passed by the House on May 26, 2011, and referred to the Senate on June 6, 2011.
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(C) by inserting `first' before `obligates';
(D) by inserting `specifically' after `funds';
(E) by inserting `for the preliminary planning effort' after `support'; and
(F) in clause (i), by inserting `a public-private' before `competition'; and
(2) in subparagraph (F)--
(A) by inserting `or Defense Agency' after `military department';
(B) by striking `of such date' and inserting `of the actions intended to be taken during the
preliminary planning process';
(C) by inserting `of such actions' after `public notice';
(D) by inserting after `website' the following: `and through other means as determined
necessary';
(E) by inserting after the first sentence the following: `Following the completion of
preliminary planning for a public-private competition, if applicable, the head of a military
department or Defense Agency shall submit to Congress written notice of the initiation of
the public-private competition and shall announce such initiation in the Federal Register.';
and
(F) by striking `Such date is the first day of preliminary planning for a public-private
competition for' and inserting `The date of such announcement shall be used for'.
Section 939. Conversion of Certain Functions from Contractor Performance to
Performance by Department of Defense Civilian Employees.
Section 2463 of title 10, United States Code, is amended—
(1) in subsection (b)(1)--
(A) by striking subparagraph (A) and inserting the following new subparagraph (A):
“(A) is an inherently governmental function;';
(B) by redesignating subparagraphs (C) and (D) as subparagraphs (F) and (G),
respectively; and
(C) by inserting after subparagraph (B) the following new subparagraphs (C), (D), and
(E):
“(C) acquisition workforce functions;”
“(D) is a critical function that is necessary to maintain sufficient organic expertise and
technical capability;”
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“(E) has been performed by Department of Defense civilian employees at any time
during the previous 10-year period;”;
(2) by redesignating subsections (d) and (e) as subsections (f) and (g), respectively;
(3) by inserting after subsection (c) the following new subsections (d) and (e):
“(d) Determinations Relating to the Conversion of Certain Functions- (1) Except as provided
in paragraph (2), in determining whether a function should be converted to performance by
Department of Defense civilian employees, the Secretary of Defense shall--
(A) develop methodology for determining costs based on the guidance outlined in the
Directive-Type Memorandum 09-007 entitled “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 determination;”
“(B) take into consideration any supplemental guidance issued by the Secretary of a
military department for determinations affecting functions of that military department;”
and
“(C) ensure that the difference in the cost of performing the function by a contractor
compared to the cost of performing the function by Department of Defense civilian
employees would be equal to or exceed the lesser of--
(i) 10 percent of the personnel-related costs for performance of that function; or
(ii) $10,000,000.”
(2) Paragraph (1) shall not apply to a function described in subparagraph (A) of subsection
(b)(1).
(e) Notification Relating to the Conversion of Certain Functions- The Secretary of Defense
shall establish procedures for the timely notification of any contractor who performs a
function that the Secretary plans to convert to performance by Department of Defense civilian
employees pursuant to subsection (a). The Secretary shall provide a copy of any such
notification to the congressional defense committees.'; and
(4) in subsection (g), as redesignated by paragraph (2)--
(A) by striking “this section” and all that follows and inserting `this section:'; and
(B) by adding at the end the following new paragraphs:
“(1) The term “functions closely associated with inherently governmental functions'” has the
meaning given that term in section 2383(b)(3) of this title.”
“(2) The term `acquisition function' has the meaning given that term under section 1721(a) of
this title.
“(3) The term `inherently governmental function' has the meaning given that term in the
Federal Activities Inventory Reform Act of 1998 (P.L. 105-270; 31 U. S.C. 501 note).”
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Legislation Introduced in the 111th Congress
The Correction of Long-Standing Errors in Agencies’ Unsustainable
Procurements (CLEAN-UP) Act of 2009 (S. 924)
• The Correction of Long-Standing Errors in Agencies’ Unsustainable
Procurements (CLEAN-UP) Act of 2009 (S. 924) was introduced on April 29,
2009, and referred to the Senate Committee on Homeland Security and
Governmental Affairs. A comparable House bill of the same name (H.R. 2736)
was introduced on June 4, 2009.59 These bills would have prohibited action on
any A-76 competitions by providing that no competitions could be “prepared,
announced, undertaken, continued, or finished” until certain conditions were met
; one condition is that three-quarters of all federal executive agencies would be
required to make substantial progress in implementing the Circular A-76 reforms
required, as stated in this provision, and that the OMB Director had implemented
reforms listed under Section 12 of the CLEAN-UP Act.60 These bills would
require a temporary moratorium on new Circular A-76 competitions until certain
reforms required in the CLEAN-UP Act were substantially implemented.61
Both the House and Senate Financial Services and General Government Appropriations Acts for
Fiscal Year 2010 (H.R. 3170 and S. 1432, respectively) contain provisions that would extend the
moratorium on the conduct of new A-76 competitions. However, neither of these bills became
law.
H.R. 3170, Financial Services and General Government Appropriations Act for
Fiscal Year 201062
• Section 734 would have prohibited the use of appropriated funds to begin or
announce a public-private competition under OMB Circular A-76, or “any other
administrative regulation, directive, or policy;” and
• Section 743, which would have established a requirement for all federal
executive agencies, excluding DOD, 63 to submit an inventory to OMB for all
activities procured through contracts for services for the agency or on behalf of
the agency.64
59 H.R. 2736 was introduced on June 4, 2009 and on June 26, 2009 was referred to the House Subcommittee on
Government Management, Organization, and Procurement.
60 See S. 924, Section 12 – Reforms to the OMB Circular A-76 Process.
61 For further discussion on the implications of the CLEAN-UP ACT, see CRS Report R40641, Inherently
Governmental Functions and Department of Defense Operations: Background, Issues, and Options for Congress, by
John R. Luckey, Valerie Bailey Grasso, and Kate M. Manuel.
62 Financial Services and General Government Appropriations Act for Fiscal Year 2010, H.R. 3170, was introduced on
July 9, 2009, passed by the House on July 16, 2009, placed on the Senate calendar on July 20, 2009.
63 DOD is covered under S. 1390, the proposed National Defense Authorization Act for Fiscal Year 2010.
64 Financial and General Government Appropriations Act for Fiscal Year 2010, H.R. 3170, Section 743.
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S. 1432, Financial Services and General Government Appropriations Act for
Fiscal Year 2010 65
• Section 734 would have prohibited the use of appropriated funds to begin or
announce a public-private competition under OMB Circular A-76, or “any other
administrative regulation, directive, or policy,”66 and;
• Section 735, which would have established a requirement for all federal
executive agencies, excluding DOD, to submit an inventory to OMB for all
activities procured through contracts for services for the agency or on behalf of
the agency.67
65 Financial Services and General Government Appropriations Act for Fiscal Year 2010, S. 1432, was introduced on
July 9, 2009 and place on the Senate calendar.
66 Financial Services and General Government Appropriations Act for Fiscal Year 2010, S. 1432, Section 734.
67 Financial Services and General Government Appropriations Act for Fiscal Year 2010, S. 1432, Secti0n 735.
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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
Effect on the Conduct of A-76
DOD’s Response to Issues
Report No. D-2009-034
Competitions
Raised by the IG
Lack of a dedicated staff whose
The report suggested that Circular A-
OSD stated that it would not be
sole function is to conduct A-76
76 competitions put a strain on the
prudent use of department
competitions, thus staff are
workforce and adversely affected the
resources to assign employees ful -
assigned to other additional duties
mission of the organization.
time when they do not participate
in a full-time capacity.
Follow-on competitions before the Some DOD officials suggested that the
OSD stated that DOD components
final performance of the Most
cost of conducting the fol ow-on
should not focus on recompeting
Efficient Organization (MEO) were
competitions could negate savings
MEOs but on fostering competition
required by Circular A-76, but
generated by the original competition;
within all of the work performed
new legislative amendments stated
another official felt that the savings
regardless of the source or the
that follow-on competitions were
generated by the fol ow-on
organization. Furthermore, these
no longer required
competitions were minimal.
competitions should be grouped in
such a way to strive for efficient
performance and cost-effectiveness.
The qualifications of the Agency
Some smaller bases found it difficult to
OSD stated that ATOs play a
Tender Official (ATO) were
dedicate a single GS-13 employee as the significant role in the conduct of A-
inconsistent across the military
ATO (Agency Tender Official), and
76 competitions, should meet
services and fell short of the
removing a GS-13 level employee from
certain qualifications, and should be
requirements set forth in OMB
his/her primary position had a negative
routinely assigned to conduct A-76
Circular A-76, and that Section
effect on the overall mission of the
competitions to allow the
326 of P.L. 110-181 left open the
base. In one case, no GS-13 employees
individuals to grow in their skill and
question of whether the ATO has
worked in the functional area selected
competency levels. Base
standing to file a GAO protest.
for competition. Further, ATOs without commanders cannot serve as ATOs
standing could not file protect and
as they will have oversight over the
created inconsistencies in the ability of
selected service provider,
the government to compete against the
regardless of the outcome of the
private sector.
competition
Guidance on A-76 guidelines was
Differing interpretations of the A-76
OSD stated that DOD has issued
described as multi-faceted,
guidance at all levels and between OMB
guidance to implement any
overlapping, confusing, and
and OSD made it difficult to keep up
statutory obligations imposed by
untimely, making compliance
with the changing nature of laws and
Congress on the conduct of A-76
difficult particularly with the
regulations, making compliance difficult.
competitions, and that the Share A-
methodology used for costing.
76! Website and the DOD A-76
Congressionally enacted
Costing Help Desk are available to
restrictions on A-76 competitions
answer costing policy questions and
often changed every year.
to encourage that consistent costing
methodology is applied to all agency
cost estimates.
Support contractors hired to assist In some cases, it appears that the
OSD stated that new guidance was
in writing the Performance Work
apparent lack of confidence in the
written titled “Interim DOD
Statement (PWS) ranged in
selection of the support contractors,
Guidance on Competitive Sourcing
competency from adequate to
coupled with (in some cases) the lack of Program Support for Consultants”
unsatisfactory. PWS teams
technical expertise of some of the
and assigned to the OSD General
commented that the support
support contractors, created challenges
Counsel for coordination. This
contractors were often hired
in writing the PWS, identifying
guidance is consistent with the
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Circular A-76 and the Moratorium on DOD Competitions
Issue Identified by the IG in
Effect on the Conduct of A-76
DOD’s Response to Issues
Report No. D-2009-034
Competitions
Raised by the IG
because they represented the
workload requirements , and appeared
Federal Acquisition Regulation but
lowest cost contractor to the
to make for a less efficient effort and
has been written for individuals not
government, not because they
possibly, work product.
trained in acquisition-related
were more technically competent.
matters.
Training in competitive sourcing
The descriptions of the quality and
OSD stated that the services did
policy
relevance of the competitive sourcing
not request funding for competitive
training that officials received at bases
sourcing training if FY2009, and that
and installations was mixed – from
due to the lack of a competitive
“generic, not specific enough,” “helpful,
sourcing program, “any future
worthwhile, and in-depth.” The quality
training would have to be
of the instruction was mixed, in one
incorporated into consultant
case described as “inadequate” and in
support contracts.”
another, “ill-timed.”
Firewalls (defined as a separation
Firewalls increased the amount of
OSD stated that the firewall
between the PWS and MEO teams people needed to conduct a
requirement was a result of the
established to avoid any
competition, often resulting in a
GAO protest decision in “Navy vs.
appearance of a conflict of
duplication of effort, which sometimes
Jones/Hill Venture” case in May
interest)
resulted in limiting critical
2002. OSD had developed DOD
communication resulting in slowing
Interim Guidance on Firewalls
down the pace and outcome of the
which was in coordination with
competition.
OSD General Counsel to clarify
these roles.
Contracting Issues
Some base and installation officials
OSD stated that the DOD Office of
expressed concern with the inability to
Competitive Sourcing did not
acquire and retain competent
require bases and installations to
contracting officers, the lack of control
organize their competitive sourcing
over the sometimes constant turnover
offices in a specific manner and left
of contracting officers during the course such decisions to their own
of a competition, sometimes resulting in management purview. Within the
periods of time without an assigned
bases and installations, the Army
contracting officer; a limited number of
appeared to express the most
contracting officials, and the resulting
chal enges in acquiring and
delays in establishing an acquisition
maintaining sufficient contracting
strategy for the competitions.
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.
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Author Contact Information
Valerie Bailey Grasso
Specialist in Defense Acquisition
vgrasso@crs.loc.gov, 7-7617
Acknowledgments
CRS wishes to acknowledge the invaluable contributions of Jonathan Mael, a 2009 summer research
associate with the Foreign Affairs, Defense and Trade Division. Mr. Mael assisted in the research and
writing of this report.
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