OMB’s contracting efficiencies savings overstated, says GAO

Reported savings of an Office of Management and Budget initiative directing agencies cut costs through better contracting practices have been based on inconsistent data sources, says the Government Accountability Office.The effort, announced by President Obama in a March 2009 memo, directed the 24 largest federal agencies to save $40 billion annually in contracting by fiscal years 2011.In a report dated Nov. 15, the GAO says OMB has so far calculated that agencies responded with $15 billion worth of savings in fiscal 2010. It made that calculation using data from the FPDS-NG database rather than the OMB MAX budgeting system, the GAO report says. But, FPDS-NG is meant to track agency contract obligations in general; it provides no insight into the extent which agency actions undertaken as part of the savings initiative contributed to the $15 million figure OMB cited, the report notes.

In MAX, agencies are supposed to indicate specific actions undertaken as part of the effort along with the corresponding savings, but GAO auditors say it’s impossible to tell by the data in the system how much savings actually resulted.

MAX, auditors say, has been riddled with overstated savings and data entry errors. For example, at least three agencies reported in MAX that they collectively realized $1.1 billion worth of savings–but the amounts they reported weren’t savings against a baseline, but how much they actually spent. The figure, in other words, wasn’t an projection of how much more the agency would have spent but for the savings initiative, but how much it actually did spend.

Report authors say many of the data entry errors have been corrected, but some persist–including a $849 million overstatement made by the Health and Human Services Department that remains in MAX as of July 2011.

Agencies also reported billions of dollars’ worth of savings into MAX, savings that GAO says are questionable–at least, questionable based on the assumption that the point of the effort is to reduce contracting inefficiencies.

For example, NASA reported into MAX savings of $697 million–an amount that was 95 percent of its total reported fiscal 2010 savings. The cause of those savings was the retirement of the Space Shuttle, “which was even planned since January 2004 and was not the result of this initiative,” GAO auditors note.

The State Department reported $732 million of fiscal 2010 savings. (I arrived at that figure by comparing what it spent that year on contractor security personnel in Iraq and Afghanistan against what it says it would have cost to replace those contractors with federal workers.) But, State didn’t have the option of replacing all contractors with civil servants, the GAO says. State officials have told GAO officials that it would take at least 3 years to hire and train the thousands of security personnel that would be necessary to replace contractors.

State’s savings resulted from a purely “hypothetical scenario,” report authors say.

For more information, you can download the report, GAO-12-57 (.pdf)

— by David Perera, Fierce Government IT, Nov. 15, 2011 at http://www.fiercegovernmentit.com/story/ombs-contracting-efficiencies-savings-overstated-says-gao/2011-11-15?utm_medium=nl&utm_source=internal.

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