Federal Contracting: Cost-effective Contract Management Requires Sustained Commitment

GAO discussed civilian agency contracting practices and steps which could be taken to improve contractor management and oversight. GAO noted that: (1) civil agency contracting problems included agency reliance on contractors to carry out agency missions, ineffective contract administration, insufficient contract auditing oversight, and a lack of high-level management attention to contract management; (2) civilian agencies increased reliance on contractors to perform specialized program tasks and functions; (3) from 1979 to 1991, civilian agency contracting increased in value from $23 billion to $55 billion; (4) there were concerns about whether the extensive use of contractors to support government operations was more cost-effective than performing duties in-house, whether civil agencies have become overreliant on contractors, and whether civilian agencies are using contractors to formulate policy; (5) steps to ensure better contract management and administration included providing adequate contract work descriptions, independent government cost estimates, effective contractor performance and cost oversight, and incentives for good contractor performance; (6) agencies needed to clarify audit responsibilities, reduce audit backlogs, delineate unallowable and questionable costs, and establish guidelines regarding contractor discounts and voluntary management reductions; and (7) agency cultural changes were needed to emphasize contract management, including increased high level management attention, immediate and long-term commitment to contract management, and adequate information systems.