The way the Defense Department estimates the cost of insourcing contractor  positions to government employees has come under new criticism from the  Government Accountability Office.

Whether government employees or private contractors ultimately cost the  government less has long been a subject of debate, and past attempts to settle  the matter have faced scrutiny  for flaws in their methods and assumptions.

According to a GAO report dated Sept. 25, the  department’s instructions say to estimate the cost of overhead for insourced  employees by using a standard rate of 12 percent of labor costs. But the GAO and  the department’s office of inspector general have both said that rate has no  sound basis.

Until officials can determine a more meaningful rate to estimate overhead costs,  “savings expected from public-private competitions will be imprecise and  competition decisions could continue to be controversial,” the report says.

Keep reading this article at: http://www.fiercegovernment.com/story/gao-critical-how-dod-estimates-insourcing-cost/2013-10-08