Contract Management:

OFPP Policy Regarding Share-in-Savings Contracting Pursuant to the E-Government Act of 2002

GAO-03-552R: Published: Mar 24, 2003. Publicly Released: Mar 24, 2003.

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In January 2003, we issued two reports that provide insight regarding the share-in-savings (SIS) provisions of the E-Government Act of 2002: one on critical elements of training for new acquisition initiatives and one on commercial practices that foster successful SIS contracting. As follow-up to these reports, we are writing to underscore the need for the Office of Federal Procurement Policy (OFPP) to ensure (1) that members of the federal acquisition workforce understand and appropriately apply this new authority and (2) that appropriate data are collected and available to meet mandated reporting requirements regarding the effective use of SIS contracting. SIS contracting represents a significant change in the way the federal government acquires information technology. In our report on improving training for new acquisition initiatives, we emphasized the importance that industry and government experts place on training to successfully implement such change. Training on this information technology acquisition initiative will be essential to its effective implementation. In our report on SIS contracting, we highlighted the federal government's limited experience with SIS contracting as well as conditions that fostered successful implementation in commercial SIS contracts.

In view of the potential benefits of SIS programs, we think OFPP should consider developing policy and guidance that (1) specifically address the need for a well-defined training program and (2) incorporate practices that fostered success in the commercial SIS contracts we reviewed. The E-Government Act requires (1) the Director of the Office of Management and Budget (OMB) to submit a report containing descriptive as well as evaluative information on the use of SIS contracts to the Congress not later than 2 years after the date of the enactment of the act and (2) the Comptroller General to conduct a review of the OMB report and provide an independent assessment of the effectiveness of the use of SIS contracts not later than 6 months after the OMB report is issued. Providing meaningful reports to the Congress will depend on the availability of good data. However, experience has shown that such data have not always been available to make program assessments. For example, in March 1998, we reported that procurement data were inadequate to determine whether the key purposes of the Federal Acquisition Streamlining Act of 1994 were being achieved. Given this past experience and the limited use of SIS contracting by the federal government, we encourage OFPP to consider the need to collect data on the federal government's use of SIS contracting pursuant to the E-Government Act. The data should be uniform, reliable, and sufficient to accurately assess SIS use, and provide meaningful reports to Congress regarding the effectiveness of SIS contracting in improving agency processes and achieving agency missions.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: In view of the potential benefits of this initiative, we think OFPP should consider developing policy and guidance that specifically address the need for a well-defined training program.

    Agency Affected: Executive Office of the President: Office of Management and Budget: Office of Federal Procurement Policy

    Status: Closed - Not Implemented

    Comments: In January 2006, the agency councils that propose acquisition rules agreed to withdraw a rule they had proposed in 2004 that would have set policy and guidance for share-in-savings (FAR Case 2003-008). The proposed rule would have amended the Federal Acquisition Regulation to include share-in-savings contracting as authorized by the E-Government Act of 2002. However, Congress did not renew the limited statutory authority, which expired in September 2005. Although agencies may continue to use share-in-savings contracting even without the E-Government Act's authority, the senior Office of Federal Procurement Policy (OFPP) official responsible for the Office of Management and Budget's earlier initiative to implement the authority informed us that use of this approach to finance new information technology projects costs more than direct appropriations. Moreover, in view of cost concerns and the non-renewal of congressional authority, OFPP does not plan further action to develop policy and guidance to implement share-in-savings contracting, and as such there is no need to address development of a well-defined training program.

    Recommendation: In view of the potential benefits of this initiative, we think OFPP should consider developing policy and guidance that incorporate practices that fostered success in the commercial SIS contracts we reviewed.

    Agency Affected: Executive Office of the President: Office of Management and Budget: Office of Federal Procurement Policy

    Status: Closed - Not Implemented

    Comments: In January 2006, the agency councils that propose acquisition rules agreed to withdraw a rule they had proposed in 2004 that would have set policy and guidance for share-in-savings. The proposed rule would have amended the Federal Acquisition Regulation to include share-in-savings contracting as authorized by the E-Government Act of 2002. However, Congress did not renew the limited statutory authority, which expired in September 2005. Although agencies may continue to use share-in-savings contracting even without the E-Government Act's authority, the senior OFPP official responsible for the Office of Management and Budget's earlier initiative to implement the authority informed us that use of this approach to finance new information technology projects costs more than direct appropriations. Moreover, in view of cost concerns and the non-renewal of congressional authority, OFPP does not plan further action to develop policy and guidance to implement share-in-savings contracting, and as such there is no need to incorporate practices that fostered success in the commercial share-in-savings contracts we reviewed (Contract Management: Commercial Use of Share-in-Savings Contracting, GAO-03-327, Jan. 31, 2003).

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