DOD struggles with competitive sourcing

'Our reviews continue to show that DOD is not carrying out acquisitions cost-effectively and that the acquisitions themselves are not always achieving DOD's objectives.'

'Comptroller General David Walker

Henrik G. DeGyor

The Defense Department's acquisition and competitive sourcing practices are not cost-effective and fail to meet DOD's objectives, comptroller general David M. Walker told a congressional panel last month.

The biggest competitive sourcing headache for DOD continues to be the Office of Management and Budget's A-76 Circular, which calls for federal agencies to open some of their work to competition from vendors, Walker told the Senate Armed Services Subcommittee on Readiness and Management Support.

'As we have tracked DOD's progress in implementing its A-76 program since the mid- to late 1990s, we have identified a number of challenges and concerns with the program,' Walker said.
He cited the time required to complete A-76 studies, the resources needed to implement them, and the difficulty of grouping positions to compete, and reliably estimating the savings.

'Our reviews continue to show that DOD is not carrying out acquisitions cost-effectively and that the acquisitions themselves are not always achieving DOD's objectives,' Walker said.

The biggest problems, he said, are high-risk acquisition strategies and unrealistic cost, schedule and performance estimates.

Since the 1990s, the department has spent billions of dollars each year attempting to modernize its IT business processes. But success has been elusive because of 'DOD's inconsistent use of best practices for acquiring IT services,' Walker told the Senate panel.

However, the DOD has had 'limited success in modernizing its IT environment' according to Walker, and it is because of 'DOD's inconsistent use of best practices for acquiring IT services.'
Walker recommended that the DOD adopt the commercial best practices of leading companies involved in IT outsourcing when acquiring IT products and services through competitive sourcing.
He said DOD should:
  • Acquire systems in accordance with mature processes

  • Make acquisitions fit an enterprise architecture

  • Pay for systems in a series of economically justified incremental builds.

New A-76

DOD is considering the recommendations for comment. Meanwhile, the Office of Management and Budget is fine-tuning a final version of a revised A-76 document that will be published before summer, according to Angela Styles, administrator of the Office of Federal Procurement Policy.

In a hearing on President Bush's Management Agenda last month, Styles told the House Government Reform Subcommittee on Government Efficiency, Financial Management and Intergovernmental Relations that her office is close to completing a review of public comments on a draft version of the revamped circular, which was released last November. The agency received more than 700 comments on the proposed revisions.

A-76 is the centerpiece of the administration's competitive sourcing initiative, one of the five major items on the President's Management Agenda.

Recently, DOD's A-76 competitions have increased because of the agenda, Walker said. OMB directed agencies to convert or complete A-76 competitions on 15 percent of their 2000 Federal Activities Inventory Reform Act inventories by the end of fiscal 2003.

'DOD's ongoing A-76 efforts should permit it to meet OMB's goal for 2003,' Walker said. 'However, a greater challenge remains for DOD to complete studies on an additional 158,000 positions in the out years.'

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