December 22, 2016
DOD A-76 Competitions
In 1966, the Johnson Administration’s Bureau of the
Case Study: Walter Reed Army Medical Center
Budget—now the Office of Management and Budget
(OMB)—issued Circular A-76. The circular, which was last
In 2007, the debate over A-76 competitions took on a highly
updated in 2003, calls for the federal government to “rely
public dimension after the Washington Post published a series of
on the private sector for needed commercial services” and
articles criticizing conditions at the Washington, DC Walter Reed
provides a process for conducting public-private
Army Medical Center (WRAMC).
competitions. In a public-private competition, government
agency employees compete against one or more contractors
Some Members of Congress identified an A-76 competition at
to determine whether a particular agency function will
WRAMC, announced in 2000 during the final months of the
continue to be performed by government personnel or will
Clinton Administration, as potentially being part of a broader
be performed by contractor personnel.
problem at WRAMC. The competition involved base operations
support functions such as information technology, clerical
Only commercial functions may be subjected to Circular A-
support, and maintenance. The process proved to be more
76 competitions; inherently governmental functions may
complicated and drawn-out than most DOD A-76 competitions,
not. Within the text of Circular A-76, the term inherently
lasting six years and involving a series of protests, appeals, and
governmental refers to “an activity that is so intimately
Congressional actions. Finally, in November 2006, the company
related to the public interest as to mandate performance by
IAP Worldwide Services was awarded a five-year contract, for
government personnel.”
which the Army ultimately obligated $101 million.
The George W. Bush Administration coined the term
At the time, some Members of Congress raised the concern that
competitive sourcing to refer to public-private competitions
the use of A-76 procedures may have undermined the quality of
and related activities. Competitive sourcing was one of the
care at WRAMC. During a March 2007 hearing, Representative
components of the Bush Administration’s President’s
John Tierney suggested that the A-76 process led to instability
Management Agenda.
and low morale in WRAMC’s workforce, citing an unreleased
Moratorium
DOD memo: “The Army’s decision to privatize was causing an

exodus of highly skilled and experienced personnel from Walter
Reed and... fear that patient care services are at risk of mission
Beginning with the FY2008 National Defense
failure.”
Authorization Act (NDAA) (P.L.110-181), Congress
suspended new A-76 competitions within DOD, in part due
During one of several hearings held after the WRAMC A-76
to problems with an A-76 competition at Walter Reed
competition, former Air Force Chief of Staff General John
Army Medical Center. Congress has continued to approve
Jumper said, “I think that we have over-outsourced in many
similar suspensions for DOD and other agencies in annual
ways, and the direction to over-outsource was done with criteria
appropriations legislation.
that probably didn’t always work to the best interest of the people
in uniform. At Walter Reed, again, the A-76 process required
Title VII, Section 742 of the FY2016 Consolidated
outsourcing that put certain critical functions into the hands of...
Appropriations Act (H.R.2029, P.L.114-113) applies the
lowest bidders.”
following to all federal agencies, including DOD: “None of
the funds appropriated or otherwise made available by this
Regardless of alleged problems with the specific competition that
or any other Act may be used to begin or announce a study
took place at WRAMC, some in DOD continued to state that
or public-private competition regarding the conversion to
competitive sourcing was a net benefit for the organization.
contractor performance of any function performed by
Under Secretary of Defense for Installations and Environment
Federal employees pursuant to Office of Management and
Philip Grone said at a hearing on the FY2008 NDAA that A-76
Budget Circular A-76 or any other administrative
competitions “generated substantial savings whether the in-house
regulation, directive, or policy.”
or private sector wins the competition.”
Pros of Competitive Sourcing
In 2012, former Under Secretary of Defense for
Several observers have suggested that the competitions as a
Acquisition, Technology, and Logistics Jacques Gansler
whole have been beneficial for DOD. A 2006 RAND
claimed that with the A-76 moratorium, Congress had
Corporation study concluded that despite some problems
applied “well-intentioned efforts... to potentially unsuitable
identified with A-76 procedures, “There may not be a way
cases.” Gansler suggested that this might create a “risk to
for commensurate savings to be achieved without A-76.
mission effectiveness” and that it was time to “give A-76 a
Indeed, many of the negative comments we heard about A-
second chance.” During a hearing in 2016, Representative
76 might, in fact, be attributable to dissatisfaction with
Mark Meadows echoed Gansler’s views on the issue:
budget cuts.”
“Promoting public-private competition through the A-76
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DOD A-76 Competitions
process... is the way we realize cost savings for the
perspective when managed by government. Representative
American taxpayer.”
Gerry Connolly said during a 2016 hearing
Many individuals in the federal contractor community and
You shouldn’t be looking at the whole issue of
broader private sector have long expressed strong support
outsourcing... on an a priori basis. Look at it on a
for elimination of the moratorium in DOD and other
case-by-case, merit basis. Does it make sense, does
agencies. Former Bush Administration official Angela
it meet certain criteria in terms of cost... but also
Styles claimed in 2016 that it was, “A true travesty of
quality? Quality does matter, and common sense
public governance that public-private competition has been
matters... There are some inherently governmental
stalled for eight years, and every attempt to create a true
functions that should never be, in my view,
infrastructure for competition has been struck down by
outsourced.
special interests.”
Review and Implementation Costs
Cost Savings
Some have also suggested that A-76 competitions might be
Prior to the moratorium on new DOD A-76 competitions,
less cost-effective than official estimates have claimed, due
OMB assessments suggested that the competitions served
to the administrative and implementation costs of the
as a highly effective tool for cost reduction in DOD. The
competition procedures themselves. In 2007, for example,
Bush administration released a related report in 2008,
Senator Barbara Mikulski and colleagues discussed these
shortly after the approval of the moratorium. The report
types of costs that were associated with the WRAMC A-76
estimated that from FY2003 to FY2007, DOD’s completed
competition process. In a letter to the Secretary of the
A-76 competitions had resulted in a cumulative net savings
Army, Senator Mikulski wrote that the review process “not
of $1.8 billion.
only took... $7 million to complete, but would cost
taxpayers another $5 million to implement.”
Figure 1. DOD A-76 Competitions Prior to FY2008
Moratorium: DOD-reported Net Savings and Costs
Difficulty of Independent Verification
Some observers have also questioned the extent to which
cost reductions associated with A-76 competitions can be
concretely and objectively verified. In a 2016 congressional
hearing, University of Maryland professor Donald Kettl
said, “There is no consistent methodology by which to
make effective cost comparisons between public and
private provision of government’s work.”
Status
The FY2017 Department of Defense Appropriations Act
(H.R.5293) passed the House in June 2016. Section 10009
of the bill would continue the prohibition on conducting A-
76 competitions.

Source: DOD Competitive Sourcing Reports, FY2003-FY2007.
The Senate version of the FY2017 NDAA (S.2943)
Notes: “FTE” refers to “full-time employee equivalents,” a measure
contained a provision (Section 806) that would have
of the number of man-hours competed.
repealed the ban on A-76 competitions in DOD. This
language was not included in the final bill.
Advantages of Contractor Specialization
Some have argued that contractors’ special skills can
Additional Resources
provide quality and cost benefits—notably in niche fields of
For additional information on the A-76 moratorium and
information technology. A 2012 report co-authored by
DOD service contract procurement, see: Archived CRS
former Under Secretary Gansler stated that
Report R40854, Circular A-76 and the Moratorium on
DOD Competitions: Background and Issues for Congress,
Contractors often specialize in a particular service
by Valerie Bailey Grasso; CRS Report R42325, Definitions
and can provide it to multiple entities on a constant
of “Inherently Governmental Function” in Federal
basis, increasing efficiency... For example, in the
Procurement Law and Guidance, by Kate M. Manuel; and
event that the DoD requires a computer
CRS Report R42341, Sourcing Policy: Selected
programmer with experience using a certain
Developments and Issues, by L. Elaine Halchin.
programming language, it may make more sense...
to hire a contractor rather than to retrain a
Moshe Schwartz, Specialist in Defense Acquisition
government employee who is experienced in
Gabriel M. Nelson, Research Assistant
another computer language.
Heidi M. Peters, Research Librarian
Cons of Competitive Sourcing
In contrast, other observers have suggested that some
IF10566
activities can, in fact, be more effective from a quality

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DOD A-76 Competitions



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