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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

November 2011: 

Federal Contracting: 

OMB's Acquisition Savings Initiative Had Results, but Improvements 
Needed: 

GAO-12-57: 

GAO Highlights: 

Highlights of GAO-12-57, a report to congressional requesters. 

Why GAO Did This Study: 

In 2009, President Obama directed the Office of Management and Budget 
(OMB) to provide guidance to the 24 largest agencies to save $40 
billion annually in contracting by fiscal year 2011 and reduce the 
share of dollars obligated under new high-risk contracts by 10 percent 
in fiscal year 2010. Agencies were to submit plans for meeting these 
goals to OMB’s Office of Federal Procurement Policy (OFPP), which 
implemented the initiative. GAO was asked to assess (1) the extent to 
which the OMB initiative yielded the intended savings from 
contracting, (2) how effectively agencies reduced obligations on new 
high-risk contracts, and (3) the savings and risk reduction strategies 
to identify those that have the potential to yield long-term savings 
or improve acquisition outcomes. GAO reviewed agencies’ savings and 
risk reduction plans and agency-reported data, and met with OFPP and 
senior procurement officials at each agency. 

What GAO Found: 

While agencies reported substantial savings, GAO found problems with 
the reported data and identified missed opportunities to further 
reduce high-risk contracts. Nevertheless, the initiative has prompted 
agencies to take actions to identify potential contract savings and 
reduce contracting risks. 

The extent of savings resulting from OMB’s initiative is unclear. 
While OMB reported that agencies reduced contract spending by $15 
billion from fiscal year 2009 to fiscal year 2010, this analysis was 
based on governmentwide spending trends and not solely due to the 
savings initiative. GAO found billions of dollars in overstated and 
questionable savings, reported by civilian agencies in early fiscal 
year 2011. For example, one agency reported about $1.9 billion in 
savings that represented total contract obligations rather than 
savings, while the National Aeronautics and Space Administration 
reported $660 million in savings resulting from a 2004 decision to 
retire the Space Shuttle. Further, the Defense Department’s 2010 
savings, reported in August 2011, stemmed from a broader, ongoing 
effort to reduce the department’s budget—and were not necessarily tied 
to contract savings. GAO also found that agency officials were 
confused about what constitutes a savings due to OMB’s broad and 
changing guidance, and whether the savings initiative would continue 
in future years. In July 2011, OMB introduced an initiative to reduce 
spending on professional and management services contracts, but it is 
unclear how this effort will affect the savings initiative. 

Although OMB has not reported on the overall results of efforts to 
reduce the use of new high-risk contracts, GAO found that in fiscal 
year 2010, agencies decreased use of those contracts, as a share of 
base spending, by less than 1 percent—well short of the 10 percent 
goal. OMB did report on results of individual categories of newly 
awarded high-risk contracts—noncompetitive, competitive solicitations 
receiving only one offer, cost-reimbursement, and time-and-materials 
contracts—but GAO’s analysis yielded different results. Variations in 
results were primarily due to differences in the methodologies used by 
GAO and OFPP on how certain contracts were allocated to the individual 
high-risk categories, and an adjustment GAO made for one large 
contract that an agency incorrectly coded as being high-risk. Further, 
OFPP’s focus on only new high-risk contracts limited the potential for 
greater risk reduction. When all high-risk obligations are taken into 
account, such as for orders under noncompeted blanket purchase 
agreements and certain task orders, there was nearly a 2 percent 
increase in the share of high-risk spending from fiscal year 2009 to 
2010. 

Agencies did use OMB’s initiative to garner support from agency 
leadership to review contracts for cost and risk reduction 
opportunities. GAO identified many acquisition savings and risk 
reduction strategies that agencies used—-such as improved planning, 
strengthening the workforce, and streamlining processes-—that show 
promise in yielding long-term savings or improved acquisition 
outcomes. For example, one agency reported saving nearly $350 million 
by leveraging its buying power when purchasing office supplies, 
software licenses, and other items. Others reported savings by hiring 
experienced cost and price analysts or training existing personnel in 
these skills, seeking discounts under blanket purchase agreements, and 
using online tools to promote competition. 

What GAO Recommends: 

GAO recommends that OMB continue to focus on the savings initiative 
and clarify how it aligns with other new initiatives, clarify guidance 
on how agencies’ initiatives are defined and reported, and expand the 
initiative to include all high-risk actions. GAO also recommends that 
OMB report on the results of the initiative through fiscal year 2011. 
OFPP expressed concern that the report presents an incomplete picture 
of savings, especially at DOD. GAO disagrees and believes the report 
accurately portrays the scope and results of agencies’ efforts under 
the initiative. OFPP agreed to adopt, where appropriate, GAO’s 
recommendations regarding recording and methodological concerns. 

View [hyperlink, http://www.gao.gov/products/GAO-12-57]. For more 
information, contact John P. Hutton at (202) 512-4841 or 
huttonj@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Total Results of OMB's Initiative Uncertain Due to Unclear Guidance 
and Data Discrepancies: 

Agencies Have Slightly Decreased Use of New High-Risk Contracts, but 
OFPP's Approach Limited the Full Potential of Agencies' Efforts: 

Agencies Are Employing a Variety of Acquisition Savings Strategies to 
Achieve Long-Term Savings and Improve Outcomes: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Summary of the 24 CFO Act Agencies' Unadjusted and 
Adjusted Savings Baselines and Associated Fiscal Year 2010 Savings 
Targets: 

Appendix III: Comments from the Office of Management and Budget: 

Appendix IV: Comments from the Department of Defense: 

Appendix V: Comments from the Department of Homeland Security: 

Appendix VI: Comments from the Department of Health and Human Services: 

Appendix VII: Comments from the Department of Labor: 

Appendix VIII: GAO Contacts and Staff Acknowledgments: 

Related GAO Products: 

Tables: 

Table 1: Comparison of OMB's High Risk Contract Categories: 

Table 2: Office of Federal Procurement Policy's (OFPP) Categories of 
Acquisition Savings Strategies: 

Table 3: Change in Agencies' Obligations for New High-Risk Contracts 
for Fiscal Year 2010 When Compared to Fiscal Year 2009 Obligation Data: 

Figures: 

Figure 1: Obligations Made by the 24 CFO Act Agencies in Fiscal Year 
2010 (in billions): 

Figure 2: Effect of Including all High Risk Obligations When 
Determining the Change in Fiscal Year 2010 Obligations as a Share of 
Base Spending from Fiscal Year 2009: 

Figure 3: Comparison of Forward and Reverse Auction Processes: 

Abbreviations: 

BPA: Blanket Purchase Agreement: 

CAO: Chief Acquisition Officer: 

CFO: Chief Financial Officer: 

DHS: Department of Homeland Security: 

DOD: Department of Defense: 

FAR: Federal Acquisition Regulation: 

FPDS-NG: Federal Procurement Data System - Next Generation: 

GSA: General Services Administration: 

HHS: Department of Health and Human Services: 

IT: Information Technology: 

MAX: MAX Information System: 

NASA: National Aeronautics and Space Administration: 

OFPP: Office of Federal Procurement Policy: 

OMB: Office of Management and Budget: 

VA: Department of Veterans Affairs: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

November 15, 2011: 

The Honorable Susan M. Collins: 
Ranking Member: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Scott P. Brown 
Ranking Member: 
Subcommittee on Federal Financial Management, Government Information, 
Federal Services, and International Security: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

As the United States faces rapidly building fiscal pressures, there is 
widespread agreement on the urgent need to look at steps that can 
begin to change our long-term fiscal path. Addressing these fiscal 
challenges will require action on several fronts, and potentially 
large reductions in spending. With the federal government obligating 
hundreds of billions of dollars in contracts for goods and services 
each year--about $537 billion in fiscal year 2010--agencies are being 
asked to buy smarter and to do more with less. Thus, the potential for 
savings through contracting has been a key area of focus. In March 
2009, the Obama administration directed the Office of Management and 
Budget (OMB) to develop governmentwide guidance to assist agencies in 
identifying contracts that are wasteful or inefficient and to 
formulate appropriate corrective action in a timely manner. 
Subsequently, OMB undertook a comprehensive effort to reform 
government contracting, including a goal of saving $40 billion 
annually by the end of fiscal year 2011. OMB also directed agencies to 
reduce the share of their obligations through new contracts in fiscal 
year 2010 by 10 percent in certain high-risk categories, such as 
noncompetitive awards and cost-reimbursement contracts. The 24 
agencies subject to the Chief Financial Officers (CFO) Act were 
directed to submit acquisition savings plans to the Office of Federal 
Procurement Policy (OFPP)--the office within OMB assigned to manage 
and oversee the implementation of the initiative--outlining the 
actions they planned to take. 

With the completion of fiscal year 2011, the acquisition savings and 
high-risk contract reduction initiative has passed a milestone date; 
the time frame by which agencies were directed to reduce contracting 
by $40 billion annually and limit the use of risky contracting 
practices. You requested that we review the status of the 
administration's acquisition savings and high-risk contract reduction 
goals and identify strategies agencies implemented that may show 
potential for being leveraged across government. Accordingly, we 
assessed: (1) the extent to which OMB's initiative has achieved the 
intended savings from contracting, (2) the effectiveness of OMB's 
initiative to reduce obligations on new high-risk contract awards as a 
share of base spending by 10 percent, and (3) the acquisition savings 
and risk reduction strategies to identify those with the potential to 
yield long-term savings or improve acquisition outcomes. 

We used the following methodologies to develop our findings: 

* To assess the extent to which OMB's initiative achieved the intended 
savings, we reviewed agencies' acquisition savings plans and met with 
senior procurement officials at each of the 24 participating agencies 
to obtain greater insight into their respective plans. We also 
reviewed OMB and OFPP documents regarding this and other acquisition 
reform initiatives, obtained fiscal year 2010 and 2011 cost savings 
data from OMB's MAX Information System (MAX), and met with OFPP 
officials to discuss their management and oversight of the initiative. 
[Footnote 1] We analyzed the MAX data to determine agencies' estimated 
and reported savings and identified numerous issues affecting its 
quality. As a result, we believe the savings totals in MAX do not 
provide an accurate representation of the savings agencies achieved 
under this initiative. 

* To assess the extent to which federal agencies reduced the share of 
dollars obligated on new high-risk contracts, we reviewed OMB and OFPP 
documents and met with senior procurement officials at each agency and 
with OFPP. We also analyzed obligation data from the federal 
government's procurement database--the Federal Procurement Data System 
- Next Generation (FPDS-NG)--for fiscal years 2009 and 2010 and 
applied OFPP's methodology for calculating the results of this 
initiative. Though we have previously reported on issues with FPDS-
NG's reliability, we have found the system to be sufficiently reliable 
for general overall trends and gaining additional insight into high-
risk contracting. We also reviewed prior GAO reports and recent 
statutory and regulatory actions pertaining to high-risk contracts and 
competition. 

* To identify acquisition savings and risk reduction strategies that 
showed promise in yielding long-term savings or improving acquisition 
outcomes, we reviewed prior GAO reports and associated 
recommendations, met with OFPP and procurement officials at each 
agency, analyzed agency acquisition savings plans and OFPP progress 
reports on savings initiatives, and reviewed reported savings data in 
MAX that were provided by OFPP. Using a nongeneralizable sampling 
approach, we selected 27 out of the more than 800 initiatives 
contained in MAX, as of January 2011, for further analysis. We 
determined that these initiatives demonstrated beneficial acquisition 
practices identified in prior GAO work, led to reported savings, or 
had the potential for widespread application across the government. 
Furthermore, the set of initiatives we selected contained a variety of 
savings strategies from multiple agencies. We asked the agency 
officials responsible for the initiatives about the development, 
implementation, and tracking of their activities and assessed their 
responses. As part of our review, we identified notable examples of 
good procurement practices included in this initiative. We also 
identified other notable examples of good procurement practices based 
on our conversations with procurement officials and our analysis of 
information contained in MAX. We did not independently validate the 
agency-reported savings. 

A more detailed description of our scope and methodology is presented 
in appendix I. We conducted this performance audit from December 2010 
to November 2011 in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a 
reasonable basis for our findings and conclusions based on our audit 
objectives. 

Background: 

OMB's July 2009 guidance to the 24 CFO Act agencies--which 
collectively account for about 98 percent of all federal spending--
established specific acquisition savings targets for fiscal years 2010 
and 2011 that would help meet the administration's annual $40 billion 
net savings goal.[Footnote 2] Agencies were given specific targets to 
reduce contract obligations by 3.5 percent for fiscal year 2010 and a 
further 3.5 percent for fiscal year 2011, when compared with fiscal 
year 2008 spending levels. OMB provided agencies with two general 
approaches on how to do this: (1) actions directly reducing spending 
as a result of decisions made--generally at the program or project 
level, and (2) actions creating savings through more effective 
acquisition practices. Agencies were also encouraged to pursue other 
actions as needed to achieve the respective savings targets. 
Additional guidance provided to agencies in September 2009 clarified 
the concept of acquisition savings to also include cost avoidance. The 
guidance noted that for each agency initiative, savings should be 
established by explaining the difference between what would have been 
spent in the absence of the initiative and what the agency expected to 
spend as a result of implementing the initiative. 

OMB's July 2009 guidance also set a goal for agencies to reduce the 
share of dollars obligated on new high-risk contracts. Using fiscal 
year 2008 obligation data obtained from FPDS-NG as a baseline, OMB 
directed agencies to take actions to reduce by 10 percent the combined 
share of dollars obligated in fiscal year 2010 on: 

1. contracts awarded noncompetitively, 

2. contracts receiving only one offer in response to a competitive 
solicitation, 

3. time-and-materials contracts,[Footnote 3] and: 

4. cost-reimbursement type contracts. 

Additional information on each high-risk contract category is provided 
in table 1. 

Table 1: Comparison of OMB's High-Risk Contract Categories: 

Contract awards: Noncompetitive contract awards: Government awards 
contract without using full and open competitive procedures. (Laws and 
regulations permit agencies to use noncompetitive procedures, if 
adequately justified, such as for an urgent and compelling need or 
under certain small-businesses procedures); 
Contract awards: Competitive solicitations awarded after receiving 
only one offer: Government conducts full and open competitive 
procurement in accordance with federal acquisition regulations, but 
receives only one offer. (Laws and regulations do not require agencies 
to assess the circumstances that led to only one offer being received); 
Contract types: Time-and-materials: Government pays fixed per-hour 
labor rates that include wages, overhead, general and administrative 
costs, and profit; government may reimburse contractor for other 
direct costs, such as travel and materials costs. Government is not 
guaranteed a completed end item or service within the ceiling price; 
Contractor makes good faith effort to meet government's needs within 
the ceiling price; 
Contract types: Cost-reimbursement: Government pays contractor's 
allowable incurred costs, which do not include profit. Also may pay a 
fee, which may be related to performance. Government is not guaranteed 
a completed end item or service within the estimated cost; 
Contractor makes good faith effort to meet government's needs within 
the estimated cost and ceiling. 

Contract awards: Noncompetitive contract awards: Where is the risk? 
Government must negotiate contracts without the benefit of a direct 
market mechanism to help establish pricing; 
Contract awards: Competitive solicitations awarded after receiving 
only one offer: Where is the risk? Government loses the ability to 
consider alternative solutions in a reasoned and structured manner; 
Contract types: Time-and-materials: Who assumes risk of cost overrun? 
Government; Where is the risk? Contract type provides limited direct 
incentive to control costs; 
Contract types: Cost-reimbursement: Who assumes risk of cost overrun? 
Government; Where is the risk? Contract type provides limited direct 
incentive to control costs. 

Sources GAO analysis of OMB and DOD data. 

Note: Data are from the Federal Acquisition Regulation, Defense 
Federal Acquisition Regulation Supplement, and DOD's Contract Pricing 
Preference Guide. 

[End of table] 

Agencies were instructed to submit their acquisition savings and risk 
reduction plans to OMB no later than November 2009. Upon receipt of 
the plans, OFPP analysts entered the acquisition savings initiative 
data into OMB's MAX system and categorized each initiative into 1 of 
11 savings strategies developed by OFPP, as shown in table 2.[Footnote 
4] OFPP designated MAX as the tracking and reporting system for the 
acquisition savings component of the initiative, as well as a means by 
which agencies could share information on specific savings strategies 
and initiatives. Agency procurement officials were instructed to 
periodically update their savings data in MAX and to enter information 
on new savings initiatives as appropriate. 

Table 2: Office of Federal Procurement Policy's (OFPP) Categories of 
Acquisition Savings Strategies: 

Savings initiative category: Terminations and Reductions; 
Description of category: Initiatives where an agency determined it 
could end contracts that are (1) ineffective, (2) wasteful, (3) 
supporting programs that are being terminated, reduced, or changed in 
scope, or (4) not otherwise likely to meet the agency's needs. 

Savings initiative category: Strategic Sourcing; 
Description of category: Initiatives where the full or partial use of 
the strategic sourcing process is applied for the procurement of 
products and/or services. 

Savings initiative category: Conversion to Lower-Risk Contract Type; 
Description of category: Initiatives that reduce the risk associated 
with a contract by using a lower risk contract type, for example by 
converting a time-and-materials contract to a cost-reimbursement or 
firm fixed-price contract. 

Savings initiative category: Negotiating Discounts; 
Description of category: Activities involving requests for discounts 
on blanket purchase agreements (BPA) or negotiating lower prices or 
rates on contracts. 

Savings initiative category: e-Procurement Strategies; 
Description of category: Initiatives using technology to improve the 
procurement process. Examples include the use of online auctions or 
electronic bidding. 

Savings initiative category: Administrative Efficiencies Using 
Technology; 
Description of category: Initiatives involving the use of technology 
to gain administrative efficiencies in the procurement process. 

Savings initiative category: Insourcing; 
Description of category: Initiatives involving bringing work in-house 
or converting work currently performed by contractors to federal 
employees. 

Savings initiative category: Conversion to Direct Acquisition; 
Description of category: Initiatives aimed at eliminating the 
administrative fees associated with the use of another agency contract 
by directly contracting for products or services. 

Savings initiative category: Other Savings Strategies; 
Description of category: Initiatives that do not fall into other 
savings categories. 

Savings initiative category: Process Review and Improvement; 
Description of category: Initiatives involving optimization of the 
acquisition process, including any underlying or associated processes, 
to achieve more efficient or consistent results. 

Savings initiative category: Acquisition Workforce; 
Description of category: Initiatives focusing on developing the skills 
and capabilities of the acquisition workforce. 

Source: OFPP and OMB. 

[End of table] 

Many of the actions identified in OMB's guidance have been highlighted 
in our prior reviews and recommendations. For example: 

* In May 2005, OMB directed agencies to implement strategic sourcing 
programs as a means of leveraging the government's buying power, due 
in part to our prior recommendations that agencies gain knowledge of 
their spending habits and take a more strategic approach to 
procurement.[Footnote 5] 

* In May 2007, OMB provided agencies with guidance on enhancing 
competition by evaluating contracting trends and identifying areas 
where the acquisition process could be strengthened. We had reported 
that the government frequently missed opportunities to take full 
advantage of competition when placing orders, for example.[Footnote 6] 

* In June 2008, OMB undertook an effort to help agencies make sound 
business decisions when using interagency contracts by ensuring 
agencies better managed their shared fiduciary responsibilities. GAO 
first designated the management of interagency contracting as a high- 
risk area in 2005, and our work has shown that to facilitate effective 
purchasing and to help obtain best value when buying goods and 
services, all parties involved in the use of interagency contracts 
should have clearly defined roles and responsibilities.[Footnote 7] 

* In July 2009, OMB instructed agencies to conduct internal reviews of 
the work professional and management service contractors were 
performing to determine whether there was a potential overreliance on 
contractors and take actions to ensure balance between public and 
private labor resources. We have long reported that the closer 
contractor services come to supporting inherently governmental 
functions, the greater the risk of contractors influencing the 
government's control over, and accountability for, decisions that may 
not be in the best interest of the government and the taxpayer. 
[Footnote 8] 

In parallel with the acquisition savings and high-risk contract 
reduction initiative, OMB also directed agencies to reduce their 
proposed discretionary spending budgets in fiscal years 2011 and 2012 
by 5 percent in each year, when compared to the previous year's budget 
levels. Although these efforts focused on agency budget proposals, 
there is some linkage with the acquisition savings initiative. In 
particular, OMB's budget guidance for fiscal years 2011 and 2012 
requested that agencies include, at a minimum, five program 
terminations, reductions, or other savings initiatives that would 
contribute to reducing agency spending below the previous year's 
budget level. 

Federal agencies, such as the Departments of Defense (DOD), Homeland 
Security (DHS), and Housing and Urban Development, are also 
simultaneously undertaking agencywide efficiency initiatives, as we 
have recently reported.[Footnote 9] For example, DOD's 2010 efficiency 
review, initiated by the former Secretary of Defense, established 
substantial cost saving and efficiency goals that are expected to be 
achieved by large-scale program changes as well as smaller 
administrative changes.[Footnote 10] For some agencies, including DHS, 
savings from contracting or reductions in high-risk contracts 
resulting from these efficiency initiatives were included in their 
savings and risk reduction plans under OMB's savings initiative. 

Total Results of OMB's Initiative Uncertain Due to Unclear Guidance 
and Data Discrepancies: 

Agencies reported substantial savings under the administration's 
acquisition savings initiative. However, the extent of actual savings 
resulting from the initiative is unclear due to (1) limitations with 
OMB's reporting of savings; (2) significant concerns regarding the 
completeness, reliability, and accuracy of the data in the system OFPP 
used to track and manage the effort; and (3) agency confusion about 
the initiative's savings targets. While OMB reported in February 2011 
that agencies reduced contract spending, the reported reduction was 
based on general obligation trends, and not agencies' reported 
acquisition savings under the initiative. We analyzed agencies' 
reported savings results in MAX and determined that it is not possible 
to accurately determine the results of this initiative, in part 
because a significant amount of the savings was based on DOD's 
identified savings. DOD's savings were solely attributed to budget 
reductions included in an overall effort to reduce spending, and were 
not necessarily tied to contract savings. According to senior DOD 
officials, OMB supported the department's decision to use a budget-
based approach to this initiative so that reported savings would be 
quantifiable and verifiable. Moreover, our analysis of the civilian 
agencies' MAX data identified overstated and questionable savings in 
the billions of dollars. Further complicating matters, the 
implementation of the initiative was hindered by an inconsistent 
understanding of savings targets by the agencies, reductions to 
agencies' baselines used to determine overall annual acquisition 
savings, and widespread variation in how agencies established savings 
targets and verified their savings were accurate. Going forward, it is 
unclear whether the administration plans to continue to focus on this 
acquisition savings initiative. 

Reported Results Unclear as OFPP Lacks Complete, Reliable, and 
Accurate Data: 

OMB's reporting on results of the acquisition savings initiative has 
been based on inconsistent data sources and time frames, creating 
uncertainty about the actual outcome of agencies' efforts. Throughout 
fiscal year 2010, OMB reported that agencies were "on track" to 
achieve $19 billion in savings for the year--or about 3.5 percent of 
fiscal year 2008 total spending. This anticipated reduction was based 
on agencies' estimated savings data in MAX, the designated data source 
OFPP used to track results from the savings initiative. OMB reported 
in February 2011 that as a result of the administration's mandate to 
reduce contract spending by $40 billion annually, the government's 
overall obligations had dropped by $15 billion from fiscal year 2009 
to 2010. However, the reported reduction in spending was based on 
governmentwide FPDS-NG obligations and not the agencies' reported 
savings under this initiative. Because FPDS-NG contains general 
information on overall procurement trends, it provides no insight into 
the extent to which agency actions as a result of the savings 
initiative contributed to this reduction. In addition, OMB's February 
2011 announcement compared obligations from 2009 to 2010, whereas the 
baseline year for the savings initiative was 2008. Our analysis of 
FPDS-NG data show that spending in 2008 was comparable to 2010 levels. 

Our analysis of the MAX data found that it is not possible to 
accurately determine savings resulting from this initiative. One key 
reason is that, while the initiative was intended to achieve contract 
savings, DOD's approach was strictly budget-driven--stemming from an 
ongoing, broader savings and cost-avoidance initiative--and included 
all related spending (not necessarily tied to contract savings) within 
the respective budget accounts. According to senior DOD acquisition 
and budget officials, the department's reported $19.3 billion in 
actual savings represented the fiscal year 2010 portion of an overall 
$330 billion in spending reductions identified in the department's 
Future Years Defense Program through 2015.[Footnote 11] For example, 
DOD reported $585 million in fiscal year 2010 savings from terminating 
the Presidential Helicopter program, which as we have previously 
reported had experienced significant cost increases and schedule 
delays.[Footnote 12] In another example, DOD reported $809 million in 
savings attributed to a strategic decision to hold the number of Army 
brigade combat teams constant rather than increasing them as planned. 
Further, although a number of DOD components--including the Army, 
Navy, Air Force, and the Defense Logistics Agency--have all 
implemented process-related improvements, such as strategic sourcing 
initiatives, savings resulting from these activities were absent from 
DOD's submission. Senior DOD acquisition officials told us that, while 
such efforts are important and continue to have high-level support 
within the department, they were deliberately excluded from the 
department's savings plan to focus more on initiatives that could be 
tied to measurable and verifiable budget reductions. The officials 
noted that OMB supported DOD's approach. 

We also found other issues with the completeness, reliability, and 
accuracy of the civilian agencies' reported fiscal year 2010 savings 
from contracting initiatives and their estimated savings for fiscal 
year 2011. Although the information in MAX, as of July 2011, showed 
that the 23 civilian agencies reported contract savings of $8 billion 
in fiscal year 2010, we found billions of dollars in overstated and 
questionable savings. Further, even when taking into consideration 
data entered into MAX on the civilian agencies' forecasted savings for 
fiscal year 2011--about $5.9 billion--and DOD's estimated fiscal year 
2011 savings of $11 billion, the 24 agencies are far short of the 
administration's $40 billion goal. 

Overstated and Questionable Savings: 

When we initially analyzed the MAX data, we found significant 
overstated savings and other data-entry errors. For example, at least 
three agencies entered full contract obligation amounts into MAX 
rather than just the amount of savings generated from initiatives 
involving those contracts.[Footnote 13] These overstatements accounted 
for $1.1 billion in erroneous reported savings for fiscal year 2010. 
We also identified duplicate entries totaling over $200 million and 
instances where dollar amounts contained multiple decimal points or 
were entered in whole dollars rather than in millions of dollars as 
OFPP had requested. After we brought these and other data 
irregularities to the attention of OFPP officials in March 2011, the 
Administrator of OFPP sent a request to the senior procurement 
officials at the 24 agencies, asking that they (1) update their 
agencies' savings data in MAX and (2) provide assurances that the 
reported savings were reasonably determined. While many of the data-
entry errors we identified were corrected as a result, other 
inaccuracies remained, and in some instances new problems arose. For 
example, although senior procurement officials at the Department of 
Health and Human Services (HHS) provided OFPP with assurances that 
their savings data were reasonably accurate, we found that an $849 
million overstatement that we had previously disclosed to HHS and OFPP 
was still in the system as of July 2011. In addition, HHS's update 
included roughly $1.0 billion more in reported savings that were full 
contract obligations rather than actual savings resulting from the 
respective initiatives. 

OMB's guidance instructed agencies to achieve acquisition savings by 
reducing demand or prices paid, or through more effective practices, 
and recognized that the acquisition savings plans would take into 
consideration agencies' specific contracting needs and unique 
missions. This broad guidance led to inconsistent, and in some 
instances, widely disparate interpretations about what constituted 
savings from the agencies' contracting initiatives. We identified 
billions of dollars in reported actual savings that we consider to be 
questionable--based on the overarching principles of this initiative 
to reduce contracting inefficiencies and improve acquisition processes 
and practices--as illustrated in the following examples:[Footnote 14] 

* Savings resulting from program terminations: A number of agencies 
relied on program terminations as a way to meet their savings targets, 
whereas others did not consider such actions to be a sustainable 
source of savings. For example, 95 percent of the National Aeronautics 
and Space Administration's (NASA) fiscal year 2010 reported savings of 
$697 million involved the scheduled retirement of the Space Shuttle, 
which had been planned since January 2004 and was not the result of 
this initiative.[Footnote 15] In contrast, senior procurement 
officials from the Department of Commerce told us they intentionally 
did not include program terminations in their savings plan, as the 
agency decided to focus more on longer-term initiatives to promote the 
effective execution and administration of contracts rather than 
onetime savings associated with terminations. 

* Savings from closing out contracts: Some agencies reported 
deobligated funds from completed contracts as savings, whereas other 
agencies did not consider this routine activity as such.[Footnote 16] 
For example, the Department of the Interior (Interior) reported $107 
million in savings from funds that were deobligated during the 
contract closeout process, representing about 40 percent of the 
department's overall reported savings. In contrast, DHS more 
appropriately reported only $1.1 million in administrative cost 
savings from expediting the contract closeout process and did not 
consider deobligation of any remaining funds as savings. 

* Savings from the use of interagency contracts: GAO has long reported 
on the challenges associated with interagency contracting. In 
reviewing agencies' reported savings, we found some instances where 
agencies were unsure whether savings resulting from interagency 
contracts should be reported by the agency executing the contract 
action or by the agency funding the requirement. For example, Interior 
reported saving $30 million by contracting on behalf of DOD for a 
counseling program. Conversely, the General Services Administration's 
(GSA) savings plan did not include any savings that may result from 
contracting it performed on behalf of other agencies. Discrepancies 
such as these increase the risk of potentially double counting 
savings, or not counting savings at all. 

* Claiming savings from contractor pension contributions: Department 
of Energy (Energy) procurement officials reported savings of $200 
million that were based on the difference between actual pension 
contribution reimbursements for certain contractors at Energy-owned 
and leased facilities, and the amount the department had budgeted. 
This difference stemmed solely from a revision of the department's 
contractor pension reimbursement policy. The revised policy states 
that Energy will generally reimburse certain contractor pension plans 
at the annual minimum funding level their plans are required to meet, 
rather than at a predetermined funding level, which for fiscal year 
2010 was higher than what was statutorily required.[Footnote 17] 
However, as we previously reported, while this action may reduce the 
department's costs for the current year, the department could be 
required to make higher contributions in future years.[Footnote 18] 

* Basing reported savings on prior or future year results: Although 
agency officials told us they generally based their reported savings 
on what would have been spent in fiscal year 2010 in the absence of 
the initiative, in some cases agencies included savings associated 
with prior or future year activities. For example, about $107 million 
of HHS's reported $175 million in fiscal year 2010 savings from 
improved contract negotiations reflected the full period of 
performance for these contracts, including future option years. 
Conversely, the Department of Justice's Federal Bureau of 
Investigation reported $32 million in savings for fiscal year 2010 
from an initiative reflecting actions that had previously taken place, 
in fiscal years 2008 and 2009. 

* Reporting savings from a hypothetical scenario: The Department of 
State used a hypothetical scenario to report substantial savings of 
$732 million in fiscal year 2010--70 percent of the agency's total 
reported savings--and estimated another $732 million in 2011. This 
reported savings was based on an unrealistic scenario wherein the 
department would stop contracting for security services in Iraq and 
directly hire government security personnel. This number was based 
solely on a GAO estimate using fiscal year 2008 data that compared the 
obligated amounts of an existing security contract to the higher 
estimated annual costs department officials said they would incur if 
the agency were to provide the services with its own 
personnel.[Footnote 19] Department of State officials had previously 
explained that although insourcing of security personnel could be an 
option for Iraq, it would easily take 3 years or longer to hire and 
train the thousands of security personnel that would be required to 
conduct the work, and, as such, was not a realistic or possible course 
of action. 

Limited Use of MAX Data: 

OFPP plans to continue using MAX data to track agencies' progress in 
achieving acquisition savings goals for fiscal year 2011 and as a way 
for agencies to share information and search out ideas for new 
initiatives. However, many procurement officials told us that entering 
savings data into MAX was time-intensive and cumbersome; one described 
the system as ultimately more of a burden than an asset. Further, a 
number of procurement officials told us that they do not use MAX for 
information sharing on their savings initiatives, but generally rely 
on informal communications with their peers at other agencies or use 
established meeting venues such as the Chief Acquisition Officers 
(CAO) Council.[Footnote 20] 

A Lack of Clarity and Direction by OFPP Led to Open Interpretation of 
Initiative Requirements: 

In implementing the acquisition savings initiative, OMB and OFPP 
guidance was broad and requirements were not always clear. In 
addition, OFPP did not consistently communicate standards and 
responsibilities or apply internal control procedures to the data 
collection process. According to our internal control standards, 
effective project management requires clearly communicated roles and 
responsibilities as well as established guidance to ensure information 
recorded is relevant and reliable.[Footnote 21] We identified issues 
with how the initiative was implemented in several respects, as 
discussed below. 

Unclear Communication of Roles and Responsibilities: 

We found that unclear communication between OFPP and DOD, and in some 
instances even within DOD, led to a significant delay in the 
department reporting its fiscal year 2010 actual savings. This 
information was not entered into the MAX system until August 2011, at 
least 8 months after almost all of the civilian agencies had initially 
updated their data. According to senior DOD budget and acquisition 
officials, since the department's estimated savings, reported in its 
November 2009 savings plan, were based entirely on planned fiscal year 
2010 budget reductions, it was assumed that no further action or 
follow-up was needed. Further, although OFPP was aware that 
responsibility for the savings initiative was with the DOD 
Comptroller's office, the budget officials responsible for compiling 
DOD's savings data told us that it was not until July 2011 that OFPP 
first requested that their office provide updated fiscal year 2010 
savings information. This communication occurred shortly after a 
meeting we had with OFPP officials to discuss the final results of our 
review, where we informed them that we had no information on DOD's 
reported savings. In addition, we found that communication gaps within 
DOD also contributed to the department's delayed reporting of savings 
information to OFPP. Specifically, although DOD acquisition officials--
in addition to OFPP--referred us to the Comptroller's office for 
additional insight into the department's savings initiatives during 
the course of our review, the Comptroller officials we spoke with were 
generally unaware of the savings initiative and unfamiliar with the 
MAX system being used to track agencies' progress toward the savings 
goals. 

In commenting on a draft of this report, OFPP officials noted that, as 
a result of lessons learned, they have recently begun working to 
improve how contract savings initiatives are communicated to the 
financial management community and have been conferring with OMB's 
Office of Federal Financial Management in this regard. 

Billions of Dollars in Baseline Reductions: 

OFPP allowed agencies to propose reductions to their fiscal year 2008 
spending baselines to reflect what were considered to be spending 
anomalies or significant onetime spending increases. Ultimately, OFPP 
allowed 11 agencies to reduce their baselines against which savings 
would be measured by $34 billion--from about $523 billion to $489 
billion--a reduction of more than 6 percent. This had the effect of 
lowering those agencies' savings targets. For example, Energy had 
proposed reducing its baseline from $24.8 billion to $6.6 billion by 
removing $18.2 billion in contracts associated with the management and 
operations of its national laboratories. This amount represented 73 
percent of Energy's total fiscal year 2008 spending. However, OFPP 
officials instructed the department to reconsider many of its proposed 
reductions, and as a result Energy's adjusted baseline was set at 
$11.0 billion, or 56 percent of its fiscal year 2008 spending. 
Energy's baseline adjustment effectively reduced its savings target 
from $868 million (3.5 percent of its original $24.8 billion baseline) 
to $385 million (3.5 percent of its adjusted baseline of $11.0 
billion). 

We also identified some instances of questionable baseline reductions. 
For example, the Department of Labor excluded $1.1 billion in 
obligations under contracts associated with the Job Corps program--the 
department's largest program, accounting for 61 percent of the 
agency's fiscal year 2008 contract spending.[Footnote 22] Procurement 
officials told us that because this program is mandated by Congress, 
it was not appropriate to include these contracts in the department's 
baseline as savings opportunities would be limited. However, even 
though the program is mandated, there may still be opportunities to 
achieve savings or improve acquisition practices associated with these 
contracts. In commenting on a draft of this report, Labor acknowledged 
there were such opportunities and noted that, beginning in fiscal year 
2012, the department will undertake actions to convert some of these 
contracts from cost-reimbursement to firm-fixed price. 

Appendix II contains more details on each agency's baseline reductions 
and the effect on their savings goals. 

Confusion about Savings Targets: 

Changes in guidance over time caused some confusion among agency 
procurement officials about the actual savings targets of the 
initiative. The initial guidance directed agencies to achieve savings 
equal to 3.5 percent of fiscal year 2008 contract spending for 2010 
and "a further 3.5 percent" for 2011. Subsequent OFPP guidance, 
provided to agencies in September 2009, provided clarification that 
the fiscal year 2011 savings goal was 7 percent of agencies' 2008 
baseline spending. As a result, we found that agencies worked toward 
different goals. Senior procurement officials from several agencies 
stated they interpreted the cumulative savings target as 10.5 percent 
(i.e., 3.5 percent in fiscal year 2010 and 7.0 percent in fiscal year 
2011). Others, however, interpreted the cumulative savings for fiscal 
years 2010 and 2011 to be 7.0 percent (i.e., 3.5 percent in fiscal 
year 2010 and 3.5 percent in fiscal year 2011). To illustrate, HHS 
procurement officials told us they understood the fiscal year 2011 
savings goal to be 3.5 percent of their agency's adjusted fiscal year 
2008 baseline and instructed staff to develop initiatives to save $205 
million. If the department had used the 7 percent goal and did not 
reduce its baseline, the fiscal year 2011 savings target would have 
been $778 million. 

Inconsistent Standards for Estimating and Verifying Reported Savings: 

OFPP's broad implementation guidance provided agencies with 
significant discretion as to how to identify or determine savings. As 
a result, agencies often did not apply similar standards when 
estimating potential savings or determining the reasonableness and 
accuracy of reported savings. 

* Developing savings estimates: A number of senior procurement 
officials told us they delegated responsibility to develop estimates 
for their savings initiatives to the specific offices responsible for 
the initiatives, whereas other agencies took a more centralized 
approach. For example, the Department of Veterans Affairs (VA) 
delegated responsibility for estimating savings to the contracting and 
program offices responsible for their specific initiatives, providing 
them with OMB's guidance on how such estimates should be developed. On 
the other hand, procurement officials within Energy's Office of 
Procurement and Assistance Management told us they were the primary 
office for developing the department's plan. A senior procurement 
official at the Bureau of Prisons, within the Department of Justice, 
explained that for new initiatives where there was no history to form 
a savings estimate, the bureau determined it was better not to develop 
an estimate rather than to derive one that was not realistic. 

* Quantifying savings from acquisition workforce initiatives: We found 
inconsistencies in how agencies addressed the potential savings from 
acquisition workforce initiatives, such as hiring or training. 
Agencies generally did not attempt to quantify potential savings from 
these initiatives, due in part to difficulties in trying to measure 
savings from efficiency or productivity gains. Nonetheless, some 
agencies, such as the Department of Labor and the National Science 
Foundation, reported savings from such initiatives that were based on 
various assumptions, such as estimating productivity increases as a 
result of the training. 

* Verifying the accuracy of savings: Validation of reported savings 
was generally delegated to the organizational unit developing the 
specific initiatives, but some agencies took a different approach. For 
example, senior procurement officials at the Environmental Protection 
Agency and GSA told us they have tasked particular personnel who are 
not involved with the individual savings initiatives with validating 
the reasonableness of reported savings for each agency initiative 
prior to entering the data into MAX, and Department of the Treasury 
(Treasury) guidance instructs each bureau's CFO to conduct an 
independent third-party validation of all reported savings. As we have 
reported, validation by an independent third-party is preferred, as it 
allows for an objective and unbiased assessment.[Footnote 23] 

Problems in How Savings Initiatives were Entered and Categorized in 
MAX: 

In total, agencies initially submitted hundreds of different savings 
initiatives, which OFPP entered into MAX. The level of detail of 
initiatives contained in agencies' savings plans varied dramatically. 
In some instances, procurement officials recorded information on 
discrete savings initiatives, such as strategic sourcing of office 
supplies. But in other cases, agencies aggregated their initiatives, 
grouping together activities such as acquisition workforce training 
and negotiating discounts on existing contracts. This required OFPP to 
determine how such initiatives should be categorized in the system. 
Many senior procurement officials noted that they had difficulty 
locating their own initiatives in the system when OFPP requested they 
provide updated information. This confusion was particularly true for 
broad initiatives that encompassed multiple savings strategies. For 
example, OFPP entered one of the VA's savings initiatives into MAX as 
four separate line items, each under a different savings category. As 
a result, duplication of effort occurred, with some agencies--such as 
VA--developing their own tracking mechanisms to link their individual 
agency initiatives with those in MAX. Nuclear Regulatory Commission 
procurement officials added that 6 of the 16 initiatives OFPP entered 
into the database for their agency were not actually their 
initiatives. In addition, Treasury reported its entire savings results 
in one line item in MAX, which according to agency senior procurement 
officials was acceptable because they viewed the system as a tool to 
report savings totals. While agencies experienced challenges 
associated with using MAX, OFPP officials noted that the tool allowed 
OMB to consolidate information submitted in various formats into one 
standard template. But because agencies were given leeway to 
categorize their initiatives to suit their own purposes, broad 
categorizations decreased the usability of the information and 
provided limited visibility into the extent to which specific savings 
initiatives may yield results. 

Future Plans for the Savings Initiative Unclear: 

The extent to which this contract savings initiative will remain the 
focus of attention is unclear. OFPP officials told us they expect 
agencies to continue to implement ongoing savings initiatives and to 
update the information the MAX system. However, agency procurement 
officials told us they were unsure whether OMB's initiative would 
continue in future years. In July 2011, during a White House forum on 
accountability in federal contracting, OMB introduced a new initiative 
requiring federal agencies to reduce spending on professional and 
management services contracts by a minimum of 15 percent--or 
approximately $6 billion--by the end of fiscal year 2012. OFPP 
officials told us the primary focus during fiscal year 2012 will be on 
meeting the goals of this new initiative because spending for these 
services has grown even faster than for contracting in general and has 
disproportionately been done through vehicles GAO has identified as 
high-risk, such as time-and-materials contracts. 

Agencies Have Slightly Decreased Use of New High-Risk Contracts, but 
OFPP's Approach Limited the Full Potential of Agencies' Efforts: 

Our analysis of FPDS-NG data found that in fiscal year 2010, agencies 
cumulatively decreased the use of newly awarded high-risk contracts as 
a share of base spending by less than 1 percent when compared to the 
previous year.[Footnote 24] This result falls far short of OMB's 
overall 10 percent goal. OFPP recognized that a number of agencies 
fell short of meeting the risk reduction target and has now required 
those agencies to achieve 10 percent reductions, as a share of base 
spending, in each of the four high-risk categories for fiscal year 
2011. Further, although OMB has reported reductions in the four 
specific categories of high-risk contracts, our analysis produced 
different results. While we obtained similar results to OMB's for 
noncompetitive awards, our analysis for the remaining three high-risk 
contract categories did not show similar reductions in spending. Also, 
by focusing only on new high-risk contracting actions, OFPP's approach 
limited the initiative's full potential. Specifically, OFPP's approach 
resulted in the exclusion of hundreds of billions of dollars in 
contract modifications, orders under BPAs, option years exercised, and 
task orders issued under multiple-award contracts. Our prior work has 
indicated that several of these areas also present opportunities to 
reduce high-risk actions. 

Agencies Reduced Obligations on Some Categories of New High-Risk 
Contracts but Fell Short of Meeting OMB's 10 Percent Target: 

While OMB has not reported the overall results of agencies' efforts to 
reduce by 10 percent the share of dollars obligated through new high- 
risk contracts awarded in fiscal year 2010, our analysis shows that 
the 24 agencies cumulatively decreased the use of newly awarded high-
risk contracts as a share of base spending by 0.8 percent when 
compared to fiscal year 2009.[Footnote 25] This change equates to a 
decrease in agencies' actual spending on all newly awarded high-risk 
contracts, including orders placed under single-award indefinite 
delivery/indefinite quantity contracts, by about $5.2 billion. 
[Footnote 26] 

At various times during 2011, OMB has reported risk reduction levels 
for the individual high-risk categories; our analysis, using FPDS-NG 
data, produced similar results only for new noncompetitive 
awards.[Footnote 27] Our analyses of the change in the share of 
obligations under new contract awards receiving only one offer, and 
obligations under cost-reimbursement and time-and-materials contracts, 
yielded significantly different results from what was reported, as 
shown in table 3. 

Table 3: Change in Agencies' Obligations for New High-Risk Contracts 
for Fiscal Year 2010 When Compared to Fiscal Year 2009 Obligation Data: 

High-risk contract category: Noncompetitive contracts; 
OFPP-reported change as a share of base spending[A] (percent): -6.0; 
GAO analysis of the percentage change as a share of base spending[B] 
(percent): -5.6; 
GAO analysis of the difference in obligations on high-risk contracts 
in fiscal year 2010 when compared to fiscal year 2009[C] (dollars in 
billions): -$4.70. 

High-risk contract category: Competitive solicitations receiving one 
offer; 
OFPP-reported change as a share of base spending[A] (percent): -11.0; 
GAO analysis of the percentage change as a share of base spending[B] 
(percent): 0.3; 
GAO analysis of the difference in obligations on high-risk contracts 
in fiscal year 2010 when compared to fiscal year 2009[C] (dollars in 
billions): -$1.38. 

High-risk contract category: Cost-reimbursement contracts; 
OFPP-reported change as a share of base spending[A] (percent): 2.0; 
GAO analysis of the percentage change as a share of base spending[B] 
(percent): 9.4; 
GAO analysis of the difference in obligations on high-risk contracts 
in fiscal year 2010 when compared to fiscal year 2009[C] (dollars in 
billions): $0.58. 

High-risk contract category: Time-and-materials contracts; 
OFPP-reported change as a share of base spending[A] (percent): -19.0; 
GAO analysis of the percentage change as a share of base spending[B] 
(percent): -15.8; 
GAO analysis of the difference in obligations on high-risk contracts 
in fiscal year 2010 when compared to fiscal year 2009[C] (dollars in 
billions): -$1.12. 

High-risk contract category: All high-risk contract categories[D]; 
OFPP-reported change as a share of base spending[A] (percent): Not 
reported; 
GAO analysis of the percentage change as a share of base spending[B] 
(percent): -0.8%; 
GAO analysis of the difference in obligations on high-risk contracts 
in fiscal year 2010 when compared to fiscal year 2009[C] (dollars in 
billions): -$5.18. 

Sources: OMB and GAO analysis of FPDS-NG data. 

Notes: OMB's initial guidance stated that fiscal year 2008 spending 
for new awards should be used as a baseline to measure agencies' 
progress, but during the second half of fiscal year 2010 OFPP 
officials changed the baseline year to fiscal year 2009. 

[A] OFPP's analyses used FPDS-NG obligation data that were downloaded 
from the system in June 2011. 

[B] GAO obtained FPDS-NG data for these analyses in June 2011. We 
identified one contract, with almost $3.8 billion in obligations in 
fiscal year 2009, that was incorrectly coded in FPDS-NG as having been 
awarded after receiving only one offer. We adjusted this contract to 
reflect the correct number of offers received and incorporated it into 
our analysis. 

[C] In our analysis of obligations on high-risk contracts, we 
calculated the difference between high-risk obligations made in fiscal 
year 2009 in each of the above categories with high-risk obligations 
made in fiscal year 2010 in each of the above categories. This differs 
from the other columns, where a percentage was calculated by comparing 
the proportion of spending on new high-risk contracts with base 
spending levels in each of the fiscal years. 

[D] The FPDS-NG filtering variables used to generate data for this 
category take into consideration the potential for overlap and 
duplication between high-risk categories. 

[End of table] 

Specifically, we found that the share of new contracts awarded after 
receiving only one offer remained relatively flat--with a 0.3 percent 
increase from fiscal year 2009 to 2010--and cost-reimbursement 
contracts increased by 9.4 percent. The variations between our 
analysis and OFPP's analysis are primarily due to different 
assumptions used to allocate the share of new contracts labeled as 
"combination" in FPDS-NG. Prior to fiscal year 2010, contracts 
containing more than one contract type (i.e., portions of the contract 
were fixed-price, while other portions were cost-reimbursement or time-
and-materials) were labeled as "combination" in FPDS-NG.[Footnote 28] 
We question OFPP's methodology because it appears that the proportions 
used to allocate combination contracts to new cost-reimbursement and 
time-and-materials contracts were based on all obligations, and not 
just new awards. There are significant differences between these 
ratios. For our analysis, we determined that a more appropriate 
approach was to allocate the share of combination contracts to new 
cost-reimbursement and time-and-materials contracts in proportions 
equal to the share of new obligations in these categories. To 
illustrate, OFPP's methodology assumed 23 percent ($2.3 billion) of 
the fiscal year 2009 newly awarded combination contracts were cost-
reimbursement contracts, whereas our approach assumed about 9 percent 
($0.9 billion) of these contracts were cost-reimbursement.[Footnote 
29] We requested additional information on OFPP's rationale for the 
methodology it used to allocate combination contracts, but as of 
November 2011 had not received a response. 

The variation in results between our and OFPP's analysis for 
competitively awarded contracts with one offer received was also due 
to our exclusion of one contract, with substantial obligations, that 
had been incorrectly coded in FPDS-NG. Specifically, during our review 
of fiscal year 2009 and 2010 obligation data, we identified delivery 
orders placed under one contract administered by VA, amounting to over 
$3.8 billion in obligations, that had been incorrectly coded as having 
been awarded after receiving only one offer.[Footnote 30] In fact, 
multiple offers had been received. This error was corrected in FPDS-NG 
on October 31, 2009, just after the start of fiscal year 2010. The 
timing of the correction made it appear that there had been a large 
drop in the share of obligations under one-offer contracts in 2010, 
when in fact the share of obligations under one-offer contracts 
remained relatively stable from fiscal year 2009 to 2010. Appendix I 
contains more detail on our approach to allocating the combination 
contracts versus that used by OFPP, as well as our analysis of the VA 
contract. 

OFPP recognized that some agencies fell short of meeting fiscal year 
2010 risk reduction targets and in March 2011 issued updated guidance 
requiring these agencies to take the appropriate steps to achieve 10 
percent reductions, as a share of base spending, in each of the four 
high-risk categories for fiscal year 2011. This new target differs 
from the original cumulative high-risk contract reduction goal of 10 
percent, as a share of base spending, in that the new guidance now 
requires a 10 percent reduction, as a share of base spending, in each 
of the four high-risk contract categories. Agencies that met the 
fiscal year 2010 cumulative risk reduction target are expected to 
maintain those levels for fiscal year 2011. According to some 
procurement officials, OFPP's revised guidance may pose additional 
challenges for agencies that fell short of meeting the initial goal 
because unique mission-related needs may warrant the use of certain 
high-risk contracts. For example, senior officials from DOD and Energy 
told us they frequently use cost-reimbursement contracts for mission-
related research and development work, which can involve substantial 
uncertainties and difficulty in estimating costs with sufficient 
accuracy to use a fixed-price contract. 

Potential for Greater Risk Reduction Was Limited Due to OFPP's Focus 
on Only New Contract Awards: 

OFPP officials explained that they focused on new awards because they 
felt it would be easier for agencies to focus initially--and take 
corrective actions--on only new awards. This approach, while intended 
to achieve a certain result, excluded a substantial portion of 
government obligations under high-risk contracts--about $238 billion 
in fiscal year 2010. Figure 1 shows that OFPP's methodology covered 
only 14 percent of obligations and left out modifications on new high-
risk contracts and other high-risk obligations, such as orders placed 
under noncompeted BPAs and the exercise of contract option years. 

Figure 1: Obligations Made by the 24 CFO Act Agencies in Fiscal Year 
2010 (in Billions): 

[Refer to PDF for image: pie-chart] 

Non-high risk obligations, $219.92: 41%; 
Obligations on all other high-risk contracts, $218.59: 41%; 
Obligations on newly awarded high-risk contracts (OFPP's methodology), 
$75.40: 14%; 
Modifications made on newly awarded high-risk contracts, $20.76: 4%.  

Source: GAO analysis of FPDS-NG obligation data.   

Note: We identified one contract, with over $3.8 billion in 
obligations in fiscal year 2009, that was incorrectly coded in FPDS-NG 
as having been awarded after receiving only one offer. We adjusted 
this contract to reflect the correct number of offers received and 
incorporated it into our analysis. 

[End of figure] 

To understand the effect of the dollars excluded from OFPP's 
methodology, we used FPDS-NG data to determine the share of 
obligations under high-risk contracts in fiscal year 2010 as compared 
to fiscal year 2009 if modifications made on new high-risk contract 
awards (the $20.76 billion in figure 1) were added to OFPP's 
methodology. We conducted further analysis to determine the effect if 
all high-risk obligations in fiscal year 2010 were included (a 
combination of the $75.40 billion, $20.76 billion, and $218.59 billion 
in figure 1). We found that the level of risk reduction changed, in 
some instances dramatically, as shown in figure 2. 

Figure 2: Effect of Including All High-Risk Obligations When 
Determining the Change in Fiscal Year 2010 Obligations as a Share of 
Base Spending from Fiscal Year 2009: 

[Refer to PDF for image: data] 

Contracts awarded without competition: 

New high-risk awards only[A] (Using OFPP's methodology): -5.6%;  
New high-risk awards including modifications to base contract: -4.6%: 
All high-risk contracts with obligations in fiscal year[B]: -6.8%. 

Competitive solicitations having been awarded after receiving only one 
offer: 

New high-risk awards only[A] (Using OFPP's methodology): 0.3%;  
New high-risk awards including modifications to base contract: -1.2%: 
All high-risk contracts with obligations in fiscal year[B]: 16.7%. 
   
Cost-reimbursement contracts: 

New high-risk awards only[A] (Using OFPP's methodology): 9.4%;  
New high-risk awards including modifications to base contract: 11.8%: 
All high-risk contracts with obligations in fiscal year[B]: 0.7%. 

Time-and-materials contracts: 
New high-risk awards only[A] (Using OFPP's methodology): -15.7%;  
New high-risk awards including modifications to base contract: -8.0%: 
All high-risk contracts with obligations in fiscal year[B]: -6.8%. 

All high-risk categories[C]: 
New high-risk awards only[A] (Using OFPP's methodology): -0.8%;  
New high-risk awards including modifications to base contract: 0.5%: 
All high-risk contracts with obligations in fiscal year[B]: 1.9%. 

Source: GAO analysis of FPDS-NG obligation data. 

[A] To determine the percentage of risk reduction as a share of base 
spending, we used OFPP's methodology. However, the results of our 
analysis differed because we took into account one contract, with over 
$3.8 billion in obligations for fiscal year 2009, that was incorrectly 
coded in FPDS-NG, and used a different approach to adjusting those 
contracts in FPDS-NG labeled as "combination," as explained above. 

[B] Included in this analysis are all new and existing high-risk 
contracts and modifications with obligations during the fiscal year. 

[C] Obligation data have been adjusted to take into consideration any 
potential for duplication or double-counting between the four 
categories of high-risk contracts. 

[End of figure] 

As shown in figure 2, when all high-risk obligations are considered, 
the use of time-and-materials contracts as a share of base spending 
only decreased to 6.8 percent rather than the 19 percent reported by 
OMB (as shown in table 3). An even more dramatic change is found with 
competitive solicitations awarded after receiving only one offer. When 
considering all high-risk obligations as a share of base spending for 
these contracts, there is an almost 17 percent increase, compared to 
the 19 percent reduction reported by OMB.[Footnote 31] 

By focusing solely on new high-risk contract awards, OFPP missed an 
opportunity to challenge agencies to further pursue additional risk 
reduction efforts, such as those identified in our prior work. We 
found cases, however, where agencies did go beyond the scope of OFPP's 
methodology and implemented some initiatives with potential for 
reducing the share of obligations under high-risk contracts, such as 
enhancing competition or reevaluating contracts during the period of 
performance to determine whether a lower-risk contracting authority 
could be used. These additional efforts include the following: 

* Modifications to new and existing contracts for additional work: The 
24 agencies obligated over $47 billion in fiscal year 2010 for 
modifications to new and existing high-risk contracts where the 
contracting action involved a new agreement that was outside the 
original scope of work, a change to the scope of work, or additional 
work that was within the existing scope of work. Some agency 
acquisition savings and risk reduction plans submitted to OFPP under 
this initiative determined that modifications for additional work 
could be converted to a lower-risk contract or that existing 
requirements could be broken into separate, competitively awarded 
contracts. For example, we found one initiative submitted by NASA that 
was based on an assessment, prior to modifying certain existing 
contracts, of whether the requirements could be split into separate 
contracts in an effort to promote full and open competition. 

* Exercising option years under existing contracts: In fiscal year 
2010, the 24 agencies exercised almost $28 billion in options on high- 
risk contracts. Option years are a common feature of government 
contracts where there is a base period of performance, generally a 
year, followed by options to extend the contract term at the 
government's discretion. This structure can present an opportunity for 
the contracting agency to review the work performed in the previous 
year and establish, for example, whether the contract requirements 
could be firmer or redefined altogether so that a lower-risk 
contracting authority could be used. In our 2009 report on cost- 
reimbursement contracts, we recommended that OFPP take action to 
revise the FAR to require contracting and program officials to 
reassess requirements at appropriate times during a contract's period 
of performance, such as when exercising options, and determine if the 
agency's experience with the procurement provides a basis for firmer 
contract pricing.[Footnote 32] OFPP, in conjunction with the Federal 
Acquisition Regulatory Council, agreed with the recommendation and has 
published an interim ruling amending the FAR to include, as a part of 
written acquisition plans, a discussion of strategies for 
transitioning to firm-fixed-price contracts to the maximum extent 
practicable, either in the current period of performance when 
exercising option years, or when awarding follow-on contracts. 
[Footnote 33] 

* Task orders on multiple-award contracts: Agencies obligated over $91 
billion under multiple-award task orders in fiscal year 2010, and are 
generally required to compete task orders on multiple-award contracts 
among all contract holders. However, as we reported in 2010, agencies 
can use a number of allowable exceptions to award orders 
noncompetitively, such as when only one contractor is capable of 
providing the supplies or services needed, or there is an urgent 
requirement.[Footnote 34] Although many exceptions to competition are 
justified, increased attention to multiple-award orders may help 
increase competition. 

* BPA orders: Agencies obligated $7.6 billion in fiscal year 2010 for 
orders placed against existing BPAs. BPAs enable agencies to fulfill 
repetitive needs for supplies and services by issuing individual 
orders as the need arises, and provide an opportunity to obtain price 
reductions and discounts. In our review of the agency acquisition and 
risk reduction plans submitted to OFPP, we identified one agency--the 
Department of Education--that fully transitioned from cost- 
reimbursement BPA orders to performance-based, firm fixed-price 
orders. Many other agencies identified initiatives focused on trying 
to obtain better pricing or more competition under their BPAs. 
However, these initiatives were not captured using OFPP's approach. 
Further, in 2009, we reported that agencies did not frequently take 
advantage of additional opportunities for competition or to negotiate 
discounts when placing orders under GSA schedule BPAs. We made a 
number of recommendations to OFPP intended to reduce the government's 
risk of overpaying for goods and services under BPAs. The FAR was 
revised in March 2011 to reflect our recommendations.[Footnote 35] 

Agencies Are Employing a Variety of Acquisition Savings Strategies to 
Achieve Long-Term Savings and Improve Outcomes: 

Agencies have taken advantage of the OMB initiative to garner support 
from agency leadership and employ strategies to save money, avoid 
costs, reduce risk, and improve the overall efficiency and 
effectiveness of the acquisition function. Many agency acquisition 
officials we spoke with expressed an understanding of the stark 
economic realities and budgetary limitations their agencies face and 
described a number of ongoing and new initiatives that they have 
undertaken with regard to contracting initiatives. 

We identified from the hundreds of contracting initiatives in MAX a 
subset that may show promise in yielding long-term savings from 
contracting or result in more efficient acquisitions. We did not 
independently validate the savings that agencies reported to OFPP, but 
in a number of instances obtained additional information from the 
officials responsible for the initiatives to determine the savings 
methodologies they used. Although we have identified these as notable 
practices, a number of these initiatives also represent common 
practices that procurement officials are expected to perform as a part 
of their regular job function. 

While many opportunities to achieve savings occur early in the 
acquisition life cycle, when acquisition plans are generally 
developed, opportunities also exist during contract performance or 
when preparing to exercise option years under a contract. 

Improving Acquisition Planning and Preparation: 

The first, and perhaps best, opportunity to reduce acquisition risk 
and generate savings is in the acquisition planning phase, when 
critical decisions are made that have significant implications for the 
cost and overall success of an acquisition. The appropriate amount of 
early planning and preparation helps to minimize risks and improve 
outcomes in both product and service acquisitions.[Footnote 36] We 
found examples of agency efforts to enhance acquisition planning and 
preparation, as discussed below. 

Table: Improving Acquisition Planning and Preparation: 

Savings and risk reduction opportunities: Leadership, collaboration, 
and accountability to achieve shared acquisition goals; 
Description: Commitment from leadership, greater accountability, and 
development of a more strategic departmentwide approach to pursing 
acquisition savings initiatives. 

Savings and risk reduction opportunities: Establishing well-defined 
and realistic requirements; 
Description: Establishing a valid need and working with program staff 
to translate the need into feasible and affordable requirements. 

Savings and risk reduction opportunities: 
Description: Selecting contracting instruments that best serve the 
needs of the acquisition. 

Savings and risk reduction opportunities: Conducting spend analysis 
and strategic sourcing of goods and services; 
Description: Developing a knowledge base about how much is being spent 
for what goods and services and determining who are the buyers and 
suppliers, thereby identifying opportunities to leverage buying, save 
money, and improve performance. 

[End of table] 

Leadership, Collaboration, and Accountability to Achieve Shared 
Acquisition Goals: 

Agency leadership, intra-agency collaboration, and accountability are 
all essential elements to an effective acquisition process. In fact, 
our prior work has found that organizations seeking to significantly 
improve acquisition outcomes must begin with an established vision and 
commitment from senior management.[Footnote 37] For example, in 
response to Treasury's initial challenges in meeting the fiscal year 
2010 savings goal, a senior-level working group consisting of the 
agency's chief procurement, financial, information, and human capital 
officers discussed actions to develop and implement additional savings 
initiatives. According to Treasury officials, this group identified 
and launched departmentwide savings opportunities and drafted 
acquisition policy updates to institutionalize good practices, such as 
increasing the use of strategic sourcing. The department also 
increased preparation time for high-value and complex acquisitions by 
instituting a new policy requiring project teams to develop 
acquisition plans 18 months prior to award for acquisitions exceeding 
$10 million or otherwise deemed high impact. Treasury requires bureau 
program officials to forecast all future requirements, including 
renewal of ongoing contracts, to ensure applicable projects are 
covered in individual acquisition plans. Department officials expect 
that this advanced planning and early collaboration will promote use 
of lower-risk contract strategies, competition, performance based 
acquisitions, and small-business participation as well as other good 
business practices. 

In another example, VA instituted an accountability process for 
selected contracts to reduce costs, minimize risk, and provide third- 
party verification of outcomes, which resulted in agency-reported 
savings of about $160 million for fiscal year 2010. Specifically, VA 
issued an oversight policy that included establishing a preaward 
contract review process administered by seasoned acquisition 
professionals, agency legal representatives, and technical advisors. 
As part of the process, the teams reviewed proposed costs for certain 
noncompetitive and governmentwide solicitations. Based on these 
reviews, the team made recommendations that were used by the 
contracting officer in negotiating fair and reasonable pricing for the 
government. According to VA officials, approximately 39 percent of the 
preaward review team recommendations were implemented in fiscal year 
2010. 

Improving Solicitations through Well-Defined and Realistic 
Requirements: 

As we have long reported, establishing a valid need and translating 
that need into an acquisition requirement is essential for obtaining 
the right outcome.[Footnote 38] Without clearly defined requirements, 
an agency increases the risk that it will pay too much for the 
services provided, acquire services that do not meet its needs, or 
enter too quickly into a sensitive arrangement that exposes the 
organization to financial, performance, or other risks. A number of 
agencies we met with have emphasized better requirement-setting during 
the planning process or at other appropriate times during a contract's 
period of performance. For example, within the Department of Justice's 
Bureau of Prisons, procurement officials worked with program staff to 
develop requirements and technical specifications for a procurement of 
private prison beds. Their efforts resulted in reported cost savings 
of $17 million in fiscal year 2010, about 18 percent below the 
previous amount paid, according to officials. Bureau contracting 
officials said they took additional time to better understand 
technical requirements, worked with program staff to visit existing 
facilities, and considered contractor past performance in developing 
new requirements. By restructuring the requirement to remove 
geographical and certain construction restrictions, officials 
indicated that they increased competition, received more favorable 
pricing, and increased inmate occupancy. 

According to officials at the Department of Housing and Urban 
Development, procurement and program officials worked together to 
limit costs by redefining requirements on lead-based paint abatement 
contracts to put a ceiling on allowable abatement costs and ensure 
that only homes with the highest potential for contamination--those 
built prior to 1978--would be targeted. Procurement officials told us 
that as a result of the newly defined requirements, the agency saved 
$13.7 million for fiscal year 2010, and they anticipate similar 
savings in future years. According to these officials, savings 
resulting from this initiative were used to supplement the agency's 
mortgage insurance fund, for which, as we have previously reported, 
the capital ratio fell below statutory levels as the economy weakened 
and home prices fell in 2008 and 2009.[Footnote 39] 

Determining the Appropriate Contract Type: 

Agencies can choose among different contract types to acquire products 
and services. As we have reported, a primary concern is the proper 
allocation of risk between the government and contractors.[Footnote 
40] By choosing the appropriate contract type, procurement officials 
can help to minimize risk while simultaneously achieving savings. In 
one example, procurement officials at Energy's National Nuclear 
Security Administration reported saving more than $40 million in 
fiscal year 2010 through the administration's Contract Cost Saving 
Program, an effort to convert contracts into less-risky types, such as 
firm fixed-priced, and to competitively resolicit contracts previously 
awarded without competition. Procurement officials told us that during 
fiscal year 2010, they reviewed $1.5 billion in contracting actions to 
identify risk reduction opportunities and contracts that may no longer 
be needed. Contract modifications or restructures were recommended on 
a case-by-case basis once the period of performance ended or as new 
requirements were developed by program offices. 

Conducting Spend Analysis and Strategic Sourcing of Goods and Services: 

Analyzing buying patterns--referred to as spend analysis--and 
strategically sourcing goods and services can provide agencies with a 
better understanding of their buyers and suppliers, with the goal of 
identifying opportunities to leverage buying power and improve 
performance. In prior reports, we have noted that spend analysis 
enabled agencies to measure the effect of changes in purchasing costs 
and supplier diversity and to be better positioned to obtain more 
advantageous terms and conditions by leveraging aggregate buying 
power.[Footnote 41] 

Almost all agencies reported some savings in fiscal year 2010 
associated with the use of strategic sourcing. For example, after 
conducting a spend analysis of its air ambulatory services, the Bureau 
of Prisons reported savings of 30 percent, or about $1.5 million, from 
negotiating a nationwide agreement rather than relying on locally 
competed contracts.[Footnote 42] Bureau procurement officials said 
that, because of the success of this initiative, they are evaluating 
how other locally procured services could be purchased more 
economically at a national level, and noted that they shared their 
spend analysis information with another organization within the 
Department of Justice that also uses air ambulatory services. In 
another example, DHS has established a departmentwide strategic 
sourcing program office, which reported saving about $347 million in 
fiscal year 2010 through a portfolio of more than 300 departmentwide 
contracts and by participating in GSA's Federal Strategic Sourcing 
Initiative.[Footnote 43] For example, the office reported that DHS 
components leveraged their buying power to save more than $60 million 
by using volume software license agreements, $1.3 million on purchases 
of body armor, and about $2.8 million on office supplies. In addition, 
procurement officials told us DHS' strategic sourcing effort has 
reduced the number of duplicative contracts between contracting 
offices, and increased operational efficiency by standardizing 
procurement practices throughout the department. 

Identifying Savings Opportunities on Ongoing Contracts: 

Agencies also reported that they sought opportunities to achieve 
savings or improve acquisitions in later phases of the acquisition 
life cycle, after the initial contract award. As we have previously 
reported, it is also important to implement a post-contract award 
process to effectively manage and assess contractor performance to 
ensure that business arrangements are being properly executed and to 
track progress toward acquisition goals.[Footnote 44] 

Table: Reducing Costs on Ongoing Contracts and Monitoring Contract 
Performance: 

Savings and risk reduction opportunities: Working with contractors to 
reduce operational costs; 
Description: Working with contractors to share information, buy 
smarter, and establish incentives that reward efficient operations. 

Savings and risk reduction opportunities: Seeking additional discounts 
through BPAs; 
Description: Regularly seeking discounts from vendors on BPAs. 

Savings and risk reduction opportunities: Renegotiating and 
restructuring contracts; 
Description: Identifying opportunities to renegotiate or restructure 
existing contracts to achieve savings, such as by updating prices 
based on current market conditions, and consolidating requirements. 

[End of table] 

Working with Contractors to Reduce Operational Costs: 

We identified one agency that worked directly with its contractors to 
achieve acquisition savings. In part based on a prior GAO 
recommendation, we found that Energy is making a concerted effort to 
work with its contractors to share information, leverage buying power, 
and establish incentives that reward efficient operations at the 
national laboratories.[Footnote 45] Our prior work has shown that when 
contractors are more directly involved in planning efforts and given 
adequate time to plan and prepare to accomplish their assigned tasks, 
the quality of the contractor's services may improve and costs may be 
lowered.[Footnote 46] Energy's senior procurement officials told us 
they developed a formal process to improve collaboration and leverage 
the buying power of the department's management and operating 
contractors, which resulted in reported savings of more than $37 
million during fiscal year 2010.[Footnote 47] Specifically, the 
department created contractor purchasing teams as a means to share 
information on laboratory buying habits and establish supplier 
agreements that can be used by all eligible Energy contractors and 
subcontractors. Department procurement officials stated that working 
with the purchasing teams has improved oversight of subcontractors and 
reduced contracting risks, in that over 90 percent of subcontracted 
transactions are through fixed-price arrangements. 

Agencies Are Seeking Additional Discounts through BPAs: 

We previously reported that agencies could realize savings from 
seeking discounts through GSA schedule BPAs.[Footnote 48] In 
discussions with senior procurement officials, we learned of various 
savings initiatives where contracting officers aggressively pursued, 
and received, substantial discounts. For example, to ensure that 
contracting officers at the Social Security Administration regularly 
seek discounts, proposed awards over $100,000 are reviewed by a more-
senior contracting officer to determine, among other tasks, whether 
discounts were sought on BPAs. As a result, procurement officials told 
us they are regularly seeking discounts from vendors when acquiring 
supplies and services under GSA schedule contracts and have achieved 
substantial savings. For example, the agency reported receiving 
discounts of more than 30 percent below the vendor's GSA schedule 
prices on BPAs for printers and scanning services, which resulted in 
savings of more than $180 million over the life of the contracts. 

Renegotiating and Restructuring Contracts: 

Many agencies reported more aggressively negotiating discounts and are 
reporting significant savings as a result. For example, Department of 
Education procurement officials reported saving $26.3 million in 
fiscal year 2010 as a result of renegotiating prices on an existing 
contract to better reflect current market conditions. Specifically, in 
the middle of a 10-year technology contract, department contracting 
and program officials determined that technological advances warranted 
a review of contract prices for items such as computing hardware and 
software. According to these officials, updated pricing benchmarks 
were established and used to renegotiate the terms of the contract. 

Strengthening the Acquisition Workforce: 

Many agencies we met with are engaged in efforts to enhance their 
acquisition workforce through hiring, retention, training, and 
development of new acquisition tools and processes intended to improve 
contracting officers' effectiveness and efficiency. In some instances, 
senior agency procurement officials told us that recruiting and 
retaining talented acquisition professionals, some with specialized 
skill sets, generated significant savings and had a positive influence 
on acquisition outcomes. 

Table: Strengthening the Acquisition Workforce: 

Savings and risk reduction opportunities: Increase use of and training 
for cost and price analysts; 
Description: Assess human-capital needs and augment the acquisition 
workforce with experts, such as cost and price analysts, who can 
improve core acquisition functions and save money. 

Savings and risk reduction opportunities: Recruitment programs to 
attract talented acquisition professionals; 
Description: Establish programs to attract and retain professional 
acquisition staff and provide on-the-job professional development 
experience. 

[End of table] 

Expanding Use of Cost and Price Analysts: 

Hiring acquisition personnel with specialized skill sets to fulfill 
critical needs can lead to savings and ensure that taxpayers received 
the best value for every dollar spent. As we have previously reported, 
some agencies reduced the number of government cost estimators, and as 
a consequence tended to rely on contractors for this task.[Footnote 
49] Some agencies reported recruiting and hiring experienced cost and 
price analysts, or providing such training to existing personnel, 
which has helped them determine the appropriate price structure of 
contracts. For example, HHS procurement officials reported saving 
$60.5 million in fiscal year 2010 by hiring two cost and price 
analysts to review contracts and offer contractor audit support for 
the Biomedical Advanced Research and Development Authority. According 
to these officials, in previous years HHS had relied on the Defense 
Contract Audit Agency to conduct cost analyses and audits of 
contractor accounting systems, but there were concerns about the 
length of time needed to conduct the audits and the associated costs. 
As a result, HHS hired two analysts with extensive experience in cost 
and price analytics to provide dedicated support for the authority's 
contracts. HHS officials noted that these analysts are not only more 
responsive to agency needs, but are also generating additional savings 
through preaward reviews and assistance with contract negotiations. 

NASA procurement officials told us they focused on improving cost and 
price analysis and negotiation skills for NASA's existing acquisition 
workforce by developing and implementing a series of training courses 
that target these skill sets. The first course provides students with 
an overview of cost analysis techniques and strategies, whereas the 
second course builds upon the techniques and strategies learned in the 
basic course while providing the students with an in-depth 
understanding of the various cost incentives available for use in 
government contracts. Since its inception in June 2008, NASA has 
provided 22 training courses for about 360 of its acquisition 
personnel, and as a result of the training, officials reported 
improvements in the quality of technical evaluations and the level of 
communication between contracting and technical personnel. 

Recruitment Programs to Attract Talented Acquisition Professionals: 

According to OMB, the capacity of the federal government's acquisition 
workforce to oversee and manage contracts has not kept pace with 
increased government spending for increasingly complex purchases. For 
example, federal civilian agencies' acquisition spending increased in 
real terms from $80 billion to $138 billion between fiscal year 2000 
and fiscal year 2008, while their acquisition workforce grew at a 
considerably lower rate.[Footnote 50] Developing the acquisition 
workforce has been a priority of the administration, and, as part of 
this effort, agencies are implementing programs to attract and retain 
skilled acquisition professionals. Recognizing the limited pool of 
skilled acquisition personnel, and high turnover of new acquisition 
professionals, the Department of Education developed an acquisition 
fellowship program to provide specialized developmental opportunities 
and on-the-job training during the first 36 months of employment. The 
fellowship provides rotational assignments in two separate acquisition 
offices, in which new hires are mentored by senior acquisition 
officials as the new hires perform critical acquisition functions, 
including market analysis, vendor outreach, and contract negotiation. 
Fellows are also rotated through a program office to learn about 
acquisitions from their customers' perspective. The program is 
designed to build the capacity and capability of future potential 
contracting officers, while enhancing interoffice cooperation and 
effectiveness. According to department officials, this program has 
contributed to lower attrition of new hires, reduced the costs 
associated with unfilled vacancies, and helped to stabilize and better 
prepare its acquisition workforce to meet the agency's future 
contracting needs. 

Streamlining Acquisitions through Technology and Process Improvements: 

Some agencies reported developing and implementing acquisition 
technology to enhance all aspects of the acquisition process. Senior 
agency procurement officials told us their agencies' use of online 
tools to promote competition and automate some aspects of the 
contracting and acquisition process has led to substantial savings, 
increased efficiencies, and in some cases, greater transparency and 
accountability. These officials explained that one of the greatest 
benefits derived from new acquisition technology applications is the 
improved availability and flow of information. 

Table: Streamlining Acquisitions through Technology and Process 
Improvements: 

Savings and risk reduction opportunities: Reverse auctions; 
Description: Reverse auctions are online tools designed to improve 
competition and drive down prices on commonly purchased products and 
services. 

Savings and risk reduction opportunities: Technology to promote small- 
business participation; 
Description: Developing new systems to reach out to small businesses, 
and streamline and simplify the acquisition process to increase 
participation. 

Savings and risk reduction opportunities: Reengineered procurement 
processes; 
Description: Optimization of acquisition processes to obtain 
efficiencies and reduce unnecessary duplication. 

[End of table] 

Using Reverse Auctions to Increase Efficiency and Enhance Competition: 

Half of the agencies involved in the initiative reported using reverse 
auctions as a way to improve competition and reduce prices on commonly 
purchased products and services. Unlike a typical, or forward auction, 
in which multiple buyers bidding against one another push the price 
up, reverse auctions enable a buyer to evaluate proposals submitted 
from multiple sellers in an online marketplace, in which sellers 
compete against one another to provide the lowest price or highest-
value offer. After considering all offers, the buyer selects the 
winning proposal, often at a reduced price. Figure 3 illustrates the 
differences between a traditional online auction marketplace and the 
reverse auction process, using an actual DHS purchase of information 
technology (IT) equipment as an example. 

Figure 3: Comparison of Forward and Reverse Auction Processes: 

[Refer to PDF for image: illustration] 

Traditional online auction marketplace: 
Individuals sought to purchase information technology (IT) equipment, 
software supplies, and support equipment. 

Buyers: 
Sellers: 

Seller receives highest bid. Final bid: equal to or higher than 
seller's starting bid. 

Reverse auction online marketplace: 
DHS solicited bids for IT equipment, software supplies, and support 
equipment. 

DHS (Buyer): DHS posts request for bids for IT equipment. A portion of 
those respond. 

Approved sellers: Number of sellers notified; 
Sellers post competitive bids. 

Buyer accepts lowest bid: Final bid: $58,100 or 10% below government 
estimate. 

Source: GAO analysis of DHS data. 

[End of figure] 

In our review of agencies' acquisition savings initiatives, we found 
that a number of agencies are taking advantage of reverse auctions to 
enhance competition and improve transparency in procurement 
operations. For example, procurement officials at DHS reported saving 
more than $50 million in fiscal year 2010 through the use of reverse 
auctions, and noted that Customs and Border Protection is considered 
to be the leading component within the agency regarding the use of 
this tool. Having first piloted a reverse auction program in fiscal 
year 2006, the component discovered that it could use the online 
marketplace to achieve lower prices on a wide range of goods and 
services, such as purchasing basic information technology services, 
while also increasing efficiency because transactions are 
automatically recorded online. Based on the success of this pilot, 
reverse auctions are now given priority consideration when selecting a 
technique to acquire noncomplex commodities and may be used for simple 
firm fixed-price services. Customs and Border Protection reported an 
average savings of approximately 10 percent on all such transactions 
in fiscal year 2010. 

Applying Technology to Promote Efficient Small-Business Participation: 

We found examples of agencies using technology to assist in meeting 
their small-business goals, while also achieving savings.[Footnote 51] 
For example, the Department of Transportation's Federal Aviation 
Administration launched a system to more efficiently acquire 
professional, technical, and management support services from small, 
women-owned, and socially and economically disadvantaged businesses 
that generated $7.5 million in reported savings during fiscal year 
2010. According to officials, this new system has enabled contracting 
officers to more quickly and efficiently acquire services from 479 
preapproved vendors that provide professional services such as systems 
engineering, business administration, and computer-system support and 
repair. Officials reported average price reductions of about 10 
percent, in addition to shorter procurement timelines, using this 
system. 

Reengineering Procurement Processes: 

We found that some agencies are undertaking efforts to optimize 
acquisition processes by changing how products and services are 
acquired in terms of business processes, organizational structures, 
and roles and responsibilities. Our prior work with leading commercial 
firms found that typical process-improvement initiatives were focused 
on improved coordination, establishment of new processes for routine 
tasks, and use of cross-functional teams made up of individuals with 
various skills to ensure the right mix of knowledge.[Footnote 52] In 
one example, officials at the Department of Housing and Urban 
Development reported saving over $8 million during fiscal year 
2011through an initiative to reduce redundancy in mortgage-
underwriting service contracts by simplifying the review process and 
focusing on only the highest-risk mortgages. According to officials, 
the department's previous mortgage-underwriting review process 
required multiple levels of review and in some instances required 
independent secondary reviews. The department replaced this approach 
with a more focused, risk-based process that officials believed cut 
the workload by more than half. 

Conclusions: 

In this era of growing fiscal constraint, it is increasingly important 
that federal agencies maximize available resources to make the best 
use of taxpayer dollars. While the administration's focus on savings 
through contracting initiatives has achieved some success, problems 
stemming from OMB's implementation have limited the potential for 
greater savings and improved acquisition outcomes. The potential of 
this initiative was hampered at the start with agencies' general sense 
of confusion about the savings targets themselves and unclear guidance 
in a number of areas. For example, by not addressing certain 
ambiguities--such as whether long-planned program terminations were 
allowable initiatives, and how savings under interagency contracts 
should be handled, among others--some agencies' savings plans included 
questionable initiatives and potentially double counting of savings. 
Further, while DOD's concrete actions to end poorly performing 
programs and to reduce other line items in the department's budget are 
commendable, the fact remains that this particular OMB initiative was 
intended to be a contract savings exercise. Taking into consideration 
DOD's approach, which was strictly budget-driven and not necessarily 
tied to contract savings--and which did not reflect contracting 
initiatives such as strategic sourcing--and the data reliability 
issues with civilian agencies' reported data in MAX, the extent to 
which agencies will meet the administration's announced goal of saving 
$40 billion in contracting for fiscal year 2011 is unclear. Moreover, 
agencies were required to expend time and resources entering data into 
MAX to comply with OMB's requests for savings information; however, 
the combined lack of guidance and controls over how savings data were 
entered and captured in the system limited OMB's ability to accurately 
and reliably report the results of the initiative. Additionally, 
because the results of the high-risk contract reduction effort--
another important undertaking for which OMB has not reported the 
cumulative results--was limited to only new awards, and, by our 
analysis, fell far short of the 10 percent target, many opportunities 
for greater risk reduction were missed. 

The issues we have identified are not insurmountable. At a minimum, 
the acquisition savings initiative has generally prompted agency 
leadership to emphasize the need to review procurements for cost and 
risk reduction opportunities. In fact, agencies reported on hundreds 
of initiatives that achieved savings, avoided costs, or were designed 
to improve the efficiency and effectiveness of the acquisition 
function. The examples we provided are only a subset of a much larger 
effort to adopt beneficial acquisition practices and help agencies 
respond to budgetary challenges and financial constraints. However, 
there is uncertainty about whether the administration plans to 
continue this savings initiative through fiscal year 2011, as 
initially planned. In the absence of clearly communicated intent, 
including how the initiative relates to others--such as OMB's recent 
initiative to reduce use of professional and management support 
contracts--any momentum the savings initiative has generated could be 
lost. 

Recommendations for Executive Action: 

To build on agencies' fiscal year 2010 achievements and leverage the 
momentum gained to date, we recommend that the Director of OMB take 
the following two actions: 

* Clarify and convey the administration's continued focus on the 
acquisition savings initiative for fiscal year 2011 and beyond, and 
address how it is expected to align with other initiatives, such as 
OMB's new undertaking to reduce the use of professional and management 
support contracts and DOD's efficiencies and other savings initiatives. 

* Report no later than the time of the fiscal year 2013 budget 
proposal submission to Congress on the dollar savings resulting from 
the agencies' initiatives and the cumulative high-risk contract 
reduction efforts for fiscal years 2010 and 2011. The results should 
be reported in a manner that can be easily compared with the 
administration's announced savings and high-risk reduction goals. 

To enhance agency implementation of the acquisition savings and high- 
risk contract reduction initiative, and to promote improved reporting 
and outcomes, we recommend that the Administrator of OFPP take the 
following three actions: 

* Clarify guidance and criteria as to: (1) what constitutes 
appropriate agency baseline reductions, (2) how savings (or cost 
avoidance) initiatives are defined and reported, and (3) how actual 
savings resulting from agency initiatives should be validated. 

* Determine OFPP's informational needs to effectively manage and 
oversee implementation of the savings initiative, including whether 
MAX is the appropriate tracking and information-sharing mechanism. If 
MAX continues to be the designated system, develop the appropriate 
quality-control measures to improve agency-reported data. 

* Revise the focus of the high-risk reduction effort to include all 
high-risk contracting actions and not just new awards. 

Agency Comments and Our Evaluation: 

We sent copies of a draft of this report to OMB and the 24 CFO Act 
agencies. A list of these agencies is provided in appendix II. 
Although the report recommendations were directed to OMB and OFPP, we 
welcomed comments from all participating agencies. Of the 24 agencies, 
14 responded with no comments; Treasury did not respond. We received 
written comments from 5 agencies (OFPP, DOD, HHS, DHS, and Labor); the 
remaining agencies provided us with technical comments. A number of 
the comments acknowledged the serious financial challenges the 
agencies face given the current fiscal environment and described the 
agencies' commitment and current efforts to adopt and expand on many 
of the best practices identified in the report. 

In its written comments (reproduced in appendix III), OFPP stated it 
would adopt, as appropriate, our three recommendations to the 
Administrator concerning the methodological and data concerns we 
identified. The comments did not address whether OMB agrees with or 
intends to address the two recommendations we made to the Director. 
OFPP expressed concern that our report presents a narrow and 
questionable picture of the results of the initiative. We disagree. We 
believe our report accurately depicts the scope of agencies' efforts 
under the initiative and the challenges they and OFPP faced in 
developing and reporting the fiscal year 2010 savings. Our report also 
discusses, in detail, the positive outcomes of this initiative, 
including many actions agencies have taken to implement acquisition 
savings and risk reduction strategies that show promise in yielding 
long-term benefits. OFPP also stated that our report presents an 
incomplete picture of the progress agencies made, particularly DOD, in 
generating savings from contracting. OFPP commented that we do not 
give proper credit to DOD's reported savings and states that those 
savings should be counted as contract savings because the department's 
initiatives are directly related to spending for the acquisition of 
weapons and support systems and services. We note, however, that 
because DOD's reported savings were solely based on reductions to the 
department's budget, they represent a mix of contracts along with all 
other program-related costs, such as DOD civilian employee pay. In 
fact, almost 20 percent of the department's fiscal year 2010 savings 
stem from reductions to other activities, such as recruiting, and not 
from the department's procurement and research and development 
accounts. DOD budget officials also told us that, with the information 
they have available, it is not possible to determine the extent to 
which the budget reductions stemmed from contract savings without a 
labor-intensive data call for each specific initiative included in 
DOD's savings plan. 

Further, while acknowledging that methodological improvements are 
needed so that the extent of future savings is more clearly 
established, OFPP expressed concern that our report focuses more on 
process than results--and that the importance of the progress agencies 
have made could be obscured as a result. We disagree. As already 
noted, an entire section of our report is devoted to highlighting the 
promising practices agencies are undertaking to achieve long-term 
savings from contracting and to reduce contracting risks. We also note 
that OMB has not yet reported on the results of the initiative for 
fiscal years 2010 or 2011; our recommendation that it do so was not 
addressed in the agency comments. Moreover, process is important. 
OFPP's ability to gauge and report on agencies' progress in meeting 
the administration's savings goals were significantly affected by a 
lack of clear guidance and communication, as well as other 
methodological issues. 

OFPP also provided technical comments, which we considered and 
incorporated into the report as appropriate. We did not make changes 
where OFPP suggested changes that were not consistent with the factual 
language in our report. 

In written comments provided by DOD (reproduced in appendix IV), the 
department stated that we called into question the extent of its 
participation in the initiative and noted that its savings were, "in a 
number of cases," tied to specific contract actions. Because, as we 
discuss in this report, we did not receive DOD's savings data until 
August 2011, our initial draft report called into question DOD's full 
participation in the savings initiative. Shortly after our draft was 
sent to the agencies for review, we met with DOD Comptroller and 
acquisition policy officials to obtain additional information on the 
department's reported fiscal year 2010 savings and the nature of its 
participation in the initiative. We revised our draft report to 
reflect the new information and provided the revisions to DOD and OFPP 
for consideration in their comments. 

In written comments provided by DHS and HHS (reproduced in appendixes 
V and VI, respectively), the agencies emphasized their commitment to 
pursue savings opportunities and employ acquisition best practices to 
curb any potential wasteful spending, as well as to promote efficiency 
in the contracting process. HHS further committed to work with its 
heads of contracting activity to review and resolve discrepancies with 
the department's savings data contained in OMB's MAX system and to 
verify its fiscal year 2010 and 2011 savings. 

In written comments provided by the Department of Labor (reproduced in 
appendix VII), the agency emphasized the success of the Job Corps 
program and reiterated its decision to adjust its savings baseline by 
excluding contract obligations under this program because these 
contracts are congressionally-mandated. At the same time, however, the 
department acknowledged the importance of reducing its high risk 
contracts, including those in support of its Job Corps program, and 
identified plans to convert some of those contracts from cost- 
reimbursement to firm fixed-price contracts beginning in fiscal year 
2012, as ongoing contracts require renewal. 

We received additional technical comments from the Departments of 
Justice, State, and VA, the Agency for International Development, and 
the Environmental Protection Agency. We incorporated the comments as 
appropriate. For example, based on the comments from VA, we revised 
our characterization of the methodology it used to develop its savings 
estimates. In its technical comments, the Department of State 
disagreed with our assessment that its security contractor savings 
initiative was based on a hypothetical and unrealistic scenario, 
noting that the department must provide security services in Iraq 
either through contractors or direct hires. As support for its 
reported savings of $732 million in fiscal years 2010 and 2011, the 
department cites our 2010 report, which presented a cost comparison of 
using contractors versus hiring its own employees to provide these 
services.[Footnote 53] We believe this is an erroneous basis for 
claiming actual contract savings under the OMB initiative. The 
department has contracted out for these services since 2004 and has no 
plans to do otherwise. As indicated by the Under Secretary of State 
for Management during a September 2009 hearing, the department could 
not hire and train sufficient numbers of personnel to meet its 
security requirements in the needed time frame. In its technical 
comments, the Agency for International Development noted that it has 
realized cost efficiencies through contracting strategies and through 
rigorous contract negotiations, increasing the impact of the agency's 
programs. For example, the agency stated that it has saved $136 
million by purchasing generic antiretroviral drugs and has used these 
savings to procure additional drugs, providing treatment to additional 
patients. 

We are sending copies of this report to interested congressional 
committees, the Director of OMB, the Administrator of OFPP, and the 
heads of the 24 agencies subject to the CFO Act. This report will also 
be available at no charge on GAO's website at [hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions about this report or need 
additional information, please contact me at (202) 512-4841 or 
huttonj@gao.gov. Contact points for our Offices of Congressional 
Relations and Public Affairs may be found on the last page of this 
report. Staff acknowledgments are provided in appendix VIII. 

Signed by: 

John P. Hutton: 
Director: 
Acquisition and Sourcing Management: 

[End of section] 

Appendix I: Scope and Methodology: 

The objectives of this review were to assess the status of the 
administration's acquisition savings and high-risk contract reduction 
goals and identify strategies agencies implemented that may show 
potential in being leveraged across government. Accordingly, we 
assessed: (1) the extent to which the Office of Management and 
Budget's (OMB) initiative has achieved the intended savings from 
contracting, (2) the effectiveness of OMB's initiative to reduce 
obligations on new high-risk contract awards as a share of base 
spending by 10 percent, and (3) the acquisition savings and risk 
reduction strategies to identify those with the potential to yield 
long-term savings or improve acquisition outcomes. 

To determine the extent to which the OMB initiative has achieved the 
intended savings from contracting, we reviewed the President's March 
2009 memorandum announcing the acquisition savings initiative and 
OMB's July 2009 guidance that instructed the 24 agencies subject to 
the Chief Financial Officers Act to develop acquisition savings plans. 
Throughout the course of the engagement, we obtained periodic updates 
on the progress agencies made in attempting to meet OMB's savings 
targets from the Office of Federal Procurement Policy (OFPP), which 
oversaw implementation of the initiative. We also obtained periodic 
reports of fiscal year 2010 and fiscal year 2011 data on agencies' 
savings initiatives from OMB's MAX Information System (MAX), which 
OFPP used to track and monitor agencies' savings efforts. We reviewed 
the savings plans agencies submitted to OFPP and the accompanying MAX 
data, and interviewed senior procurement officials at each of the 24 
agencies to (1) obtain additional insight into development of the 
agencies plans; (2) learn of the actions taken to identify 
initiatives, determine savings, and track the progress in meeting 
OMB's savings targets; (3) discuss the various savings strategies used 
as well as agency-specific initiatives that either appeared to have 
the potential to result in significant savings, or that we considered 
could be questionable; and (4) identify challenges agency procurement 
officials encountered while implementing the savings initiative. 
Because agencies submitted to OFPP or entered into MAX, as of January 
2011, information on over 800 savings initiatives, we did not conduct 
an in-depth review of each initiative. However, we did identify a 
number of initiatives that could be considered questionable or not 
consistent with the objectives of the initiative when compared with 
our prior work, prior OMB reports, or federal acquisition regulations. 

To obtain insight on agencies' progress in meeting their savings 
targets, we analyzed savings initiative data from MAX, downloaded for 
us by OFPP, on four separate occasions--January 2011, February 2011, 
April 2011, and July 2011. In the January and February datasets, we 
identified data irregularities that prevented us from determining 
agencies' actual or estimated savings. In some instances, text was 
entered into fields where dollar values were requested or savings were 
entered in whole dollars rather than in the format requested by OFPP. 
We took steps to standardize these and other errors and removed 
duplicate entries. We also identified a number of initiatives where 
agencies entered in total contract obligations rather than the actual 
savings resulting from the implementation of the savings initiative, 
which we did not attempt to correct because the actual savings from 
these initiatives were unclear. We brought these irregularities as 
well as the fact that the Defense Department (DOD) had not entered any 
savings data into MAX to OFPP officials' attention. This prompted the 
Administrator to instruct the senior procurement executives at each 
agency to review and update their agency's savings information and 
provide assurances the data were accurate. We subsequently reviewed 
agencies' reported data in MAX, as of April and July 2011, and 
although many of the data irregularities we previously identified were 
corrected, some still remained. In some instances we identified new 
irregularities with the data. Beginning in December 2010, we attempted 
to obtain information and additional insight into DOD's participation 
in this initiative and its estimated and reported savings. The 
Associate Administrator for OFPP informed us in August 2011 that the 
department's fiscal year 2010 savings data had been recently entered 
into MAX. Although at this point our audit work had been completed, we 
subsequently conducted an assessment of the savings data and met with 
senior officials from DOD's Office of the Comptroller and Defense 
Procurement and Acquisition Policy to discuss specific savings 
initiatives. 

To assess the effectiveness of OMB's initiative to reduce obligations 
on new high-risk contract awards as a share of base spending by 10 
percent, we extracted and analyzed, from the Federal Procurement Data 
System - Next Generation (FPDS-NG), high-risk contract actions and 
dollars obligated by agencies for fiscal years 2009 and 2010. We 
applied OFPP's methodology (using a set of FPDS-NG filtering 
variables) to calculate the results of the high-risk reduction 
initiative. To calculate the total base spending against which 
subsequent reductions would be compared, OFPP's approach only included 
newly awarded high-risk contracts and new orders under single award 
indefinite delivery contracts. OFPP's approach excluded all 
modifications, all multiple-award contracts, and "order dependent" and 
"other" contract types, and compared total base spending to 
noncompetitive, cost-reimbursement, time-and-material and labor-hour, 
and competitively awarded contracts receiving only one offer. Since a 
contract can fall into one or more of OMB's four high-risk categories, 
we identified all of the contracts that were in each of the categories 
and deleted the duplicates, to avoid double counting contracts. We 
also performed additional analysis of each of four high-risk 
categories to determine percentage reductions as a share of base 
spending. Since OFPP included in its methodology obligation data on 
only newly awarded high-risk contracts, we obtained additional FPDS-NG 
data containing information on modifications to new awards as well as 
contracting actions on existing awards. To understand the effect of 
the dollars excluded from OFPP's methodology, we used FPDS-NG data to 
determine: (1) the share of obligations under high-risk contracts in 
fiscal year 2010 as compared to 2009 if modifications made on new 
contract awards were added to OFPP's methodology in one scenario, and 
(2) another scenario where all high-risk obligations made in the 
fiscal year were included (including high-risk orders under blanket 
purchase agreements, task orders under multiple-award contracts, and 
contract option years). 

In general, we found FPDS-NG data to be adequately reliable for 
overall trend analysis on high-risk contracting for fiscal years 2009 
and 2010 and based our analysis on the methodology used by OFPP. 
However, system changes that were made to the type of contract and the 
number of offers fields within FPDS-NG in the beginning of fiscal year 
2010 made comparison between years problematic. For example, starting 
in 2010, the type of contract field no longer allowed for a 
combination (or hybrid) type of contract for new awards. As a result, 
we do not know how these combination contracts are allocated between 
cost-reimbursement, time-and-materials and labor-hour, and firm fixed-
price contracts for fiscal year 2009. Different assumptions produce 
different results, which is primarily the reason why the results of 
our analysis and OFPP's analysis were generally not similar. In order 
to allow for a more reasonable comparison of fiscal year 2009 and 2010 
high-risk contracting data, we assumed that the percentages of these 
contracts that held for the overall population of new awards would 
also hold for the combination contracts and we allocated the data 
accordingly. However, because we did find that the percentages for 
these types of contracts varied considerably between our three 
categories of actions (base spending, modifications to base, and not 
part of base) we decided to differentiate between these categories 
when allocating the combination obligations by type. During this 
analysis, we also found a significant error in FPDS-NG, which had been 
corrected in 2010 and affected the results for competitively awarded 
contracts with one offer. A Department of Veterans Affairs contract, 
with over $3 billion in obligations, had been incorrectly coded in 
2009 as having been awarded after receiving only one offer, when in 
fact the solicitation received eight offers. When this error was 
corrected in 2010, it skewed the data in FPDS-NG to show a significant 
decrease in newly awarded competitive solicitations receiving only one 
offer, when in actuality, obligations made on such contracts were 
relatively flat between the two years. 

We conducted interviews with agency procurement-policy representatives 
and heads of contracting activities and reviewed acquisition savings 
plans to gain additional insight into the various high-risk reduction 
actions agencies pursued as part of this initiative. We also met with 
OFPP officials and reviewed pertinent documents to understand the 
process by which OFPP gauged the success of agencies' high-risk 
reduction efforts. Where appropriate, we supplemented our analysis 
with reviews of prior GAO reports and recent statutory and regulatory 
actions pertaining to high-risk contracting authorities and 
competition. 

To identify agencies' acquisition savings and risk reduction 
strategies that show promise in yielding long-term savings or 
improving acquisitions outcomes, we reviewed prior GAO reports and 
associated recommendations, met with OFPP and agency procurement 
officials, analyzed agency acquisition savings plans and OFPP progress 
reports on the acquisition savings initiatives, and reviewed reported 
savings data in MAX that were provided by OFPP. Using a 
nongeneralizable sampling approach, we selected 27 out of more than 
800 initiatives contained in MAX, as of January 2011, for further 
analysis. To select these initiatives, we identified a set of 
beneficial acquisition practices that (1) our past work had 
identified, (2) had yielded agency-reported savings for fiscal year 
2010, or (3) could have widespread application across the government. 
Furthermore, the initiatives we selected across multiple agencies 
included a variety of savings strategies, such as acquisition 
planning, requirements setting, workforce development, contract 
negotiation practices, strategic approaches to leveraging buying 
power, efforts to reduce reliance on high-risk contracts, use of 
technology to improve efficiency, reengineering of ineffective 
business processes, and others. We asked agency officials about the 
development, implementation, and tracking of the selected initiatives, 
and assessed their responses. As part of our review, we also 
identified other notable examples of good procurement practices based 
on our conversations with procurement officials and our analysis of 
information contained in the MAX system. We incorporated information 
from these initiatives and activities as appropriate. 

We conducted this performance audit from December 2010 to November 
2011 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Summary of the 24 CFO Act Agencies' Unadjusted and 
Adjusted Savings Baselines and Associated Fiscal Year 2010 Savings 
Targets: 

Chief Financial Officers (CFO) Act Agency: Agency for International 
Development; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $3,660.00; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $3,660.00; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): [Empty]; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $128.10; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$128.10; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: $256.20; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $256.20. 

Chief Financial Officers (CFO) Act Agency: Department of Agriculture; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $5,312.00; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $2,470.00; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): -53.5%; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $185.92; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$86.45; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: $371.84; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $172.90. 

Chief Financial Officers (CFO) Act Agency: Department of Commerce; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $2,344.00; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $1,127.50; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): -51.9%; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $82.04; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$39.46; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: $164.08; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $78.93. 

Chief Financial Officers (CFO) Act Agency: Department of Defense; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $393,582.60; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $393,582.60; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): [Empty]; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $13,775.39; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$13,775.39; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 27,550.78; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $27,550.78. 

Chief Financial Officers (CFO) Act Agency: Department of Education; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $1,375.60; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $1,375.60; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): [Empty]; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $48.15; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$48.15; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 96.29; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $96.29. 

Chief Financial Officers (CFO) Act Agency: Department of Energy; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $24,800.00; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $10,954.96; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): -55.8%; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $868.00; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$383.42; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 1,736.00; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $766.85. 

Chief Financial Officers (CFO) Act Agency: Department of Health and 
Human Services; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $11,111.80; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $5,883.60; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): -47.1%; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $388.91; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$205.93; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 777.83; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $411.85. 

Chief Financial Officers (CFO) Act Agency: Department of Homeland 
Security; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $14,150.00; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $13,336.00; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): -5.8%; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $495.25; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$466.76; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 990.50; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $933.52. 

Chief Financial Officers (CFO) Act Agency: Department of Housing and 
Urban Development; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $883.90; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $883.90; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): [Empty]; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $30.94; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$30.94; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 61.87; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $61.87. 

Chief Financial Officers (CFO) Act Agency: Department of Justice; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $6,059.00; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $5,303.00; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): -12.5%; 

GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $212.07; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$185.61; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 424.13; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $371.21. 

Chief Financial Officers (CFO) Act Agency: Department of Labor; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $1,800.00; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $700.00; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): -61.1%; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $63.00; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$24.50; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 126.00; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $49.00. 

Chief Financial Officers (CFO) Act Agency: Department of State; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $5,587.90; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $5,587.90; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): [Empty]; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $195.58; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$195.58; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 391.15; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $391.15. 

Chief Financial Officers (CFO) Act Agency: Department of the Interior; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $3,734.60; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $2,676.10; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): -28.3%; 
[Empty]; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $130.71; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$93.66; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 261.42; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $187.33. 

Chief Financial Officers (CFO) Act Agency: Department of the Treasury; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $4,526.60; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $4,526.60; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): [Empty]; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $158.43; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$158.43; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 316.86; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $316.86. 

Chief Financial Officers (CFO) Act Agency: Department of 
Transportation; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $4,115.90; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $4,115.90; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): [Empty]; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $144.06; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$144.06; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 288.11; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $288.11. 

Chief Financial Officers (CFO) Act Agency: Department of Veterans 
Affairs; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $14,589.50; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $13,886.60; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): -4.8%; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $510.63; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$486.03; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 1,021.27; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $972.06. 

Chief Financial Officers (CFO) Act Agency: Environmental Protection 
Agency; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $1,360.00; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $1,360.00; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): [Empty]; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $47.60; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$47.60; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 95.20; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $95.20. 

Chief Financial Officers (CFO) Act Agency: General Services 
Administration; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $7,716.10; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $1,600.00; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): -79.3%; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $270.06; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$56.00; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 540.13; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $112.00. 

Chief Financial Officers (CFO) Act Agency: National Aeronautics and 
Space Administration; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $15,000.40; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $15,000.40; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): [Empty]; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $525.01; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$525.01; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 1,050.03; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $1,050.03. 

Chief Financial Officers (CFO) Act Agency: National Science Foundation; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $379.20; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $379.20; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): [Empty]; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $13.27; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$13.27; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 26.54; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $26.54. 

Chief Financial Officers (CFO) Act Agency: Nuclear Regulatory 
Commission; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $175.50; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $150.40; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): -14.3%; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $6.14; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$5.26; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 12.29; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $10.53. 

Chief Financial Officers (CFO) Act Agency: Office of Personnel 
Management; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $111.40; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $111.40; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): [Empty]; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $3.90; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$3.90; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 7.80; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $7.80. 

Chief Financial Officers (CFO) Act Agency: Small Business 
Administration; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $67.50; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $67.50; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): [Empty]; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $2.36; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$2.36; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 4.73; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $4.73. 

Chief Financial Officers (CFO) Act Agency: Social Security 
Administration; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $746.60; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $746.60; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): [Empty]; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $26.13; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$26.13; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: 52.26; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $52.26. 

Chief Financial Officers (CFO) Act Agency: Total; 
Fiscal year 2008 baseline spending: Unadjusted baseline spending 
(millions of dollars): $$523,190; 
Fiscal year 2008 baseline spending: Agency adjusted baseline (millions 
of dollars): $$489,486; 
Fiscal year 2008 baseline spending: GAO analysis of the percent 
reduction in agencies' baseline (percent): -6.4%; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: (3.5% of baseline): Unadjusted baseline 
(millions of dollars): $$18,311.65; 
GAO analysis of Office of Federal Procurement Policy's (OFPP) fiscal 
year 2010 savings targets: Adjusted baseline (millions of dollars): 
$$17,132.00; 
GAO analysis of OFPP's fiscal year 2011 savings targets: (7.0% of 
baseline): Unadjusted baseline (millions of dollars: $36,623.31; 
GAO analysis of OFPP's fiscal year 2011 savings targets: Adjusted 
baseline (millions of dollars): $$34,264.00. 

Sources: GAO analysis of OFPP and agency data. 

Note: OFPP allowed agencies to reduce baseline spending levels to 
account for spending anomalies or onetime spikes in spending. 

[End of table] 

[End of section] 

Appendix III: Comments from the Office of Management and Budget: 

Note: Page numbers in the draft report may differ from those in this 
report. 

Executive Office Of The President: 
Office Of Management And Budget: 
Office of Federal Procurement Policy: 
Washington, D.C. 20503: 

October 28. 2011: 

Mr. John P. Hutton: 
Director: 
Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
441 G Street, NW, Room 4440A: 
Washington, DC 20548: 

Dear Mr. Hutton: 

Thank you for the opportunity to offer views on the Government 
Accountability Office (GAO) draft report entitled Federal Contracting: 
OMB's Acquisition Savings Initiative Had Results but Improvements 
Needed" (GA0-12-57). The report discusses the Administration's 
initiative to reduce contract spending and reduce high-risk 
contracting in Fiscal Year (FY) 2010. 

We appreciate the recognition given by GAO to the many exampLes of 
success in saving money and improving acquisition outcomes. We also 
appreciate the recommendations GAO offers for achieving even greater 
fiscal responsibility in savings and risk reduction efforts going 
forward. As explained below, however, we are concerned that the report 
presents a narrow and questionable picture of results. 

The draft report made five recommendations to OMB. Two Of these 
recommendations are directed to the Director and relate to OMB's 
continued focus on acquisition savings (conveying the Administration's 
continued focus on savings and reporting on such savings with the FY 
2013 Budget). The remaining three recommendations are directed to the 
Administrator for Federal Procurement Policy and include clarifying 
guidance, determining informational needs, and expanding the high-risk 
reduction efforts beyond new awards. We will be adopting GAO's 
recommendations, where appropriate, in particular to address the 
methodological and recording concerns that were raised by GAO. 

Our initiatives to strengthen buying practices have been changed by 
the way the Federal Government does business. As a part of this 
effort, for the first time, every agency subject to the Chief 
Financial Officers Act (which collectively account for 99 percent of 
annual contract spending) put together a plan to outline its 
strategies for reducing contract costs. In some cases, these 
strategies involved commitments to buy less - for example, by 
divesting the agency of contracts that were no longer necessary or 
affordable. In other cases, the strategies entailed buying smarter in 
accordance with best practices previously identified by GAO, for 
example, by leveraging the government's buying power to negotiate 
better prices for everyday needs, and using electronic reverse 
auctions where vendors bid prices down to win an agency's work. 

Concerted efforts to use more fiscally responsible buying practices 
have produced results. In FY 2010, contract spending decreased for the 
first time in 13 years. According to data in the Federal Procurement 
Data System (FPDS), agencies spent approximately $15 billion less than 
they did in FY 2009 and $80 billion less than they would have spent 
had contract spending continued to grow at the same rate it had under 
toe previous Administration. While Final FY 2011 FPDS spending figures 
have not yet been validated by agencies, we expect contract spending 
in FY 2011 to remain near the lower level seen in FY 2009. To build on 
this progress, we have directed agencies to focus greater attention in 
FY 2012 on reducing spending on management support services, such as 
engineering and program management, where spending has grown even 
faster that for contracting in general and where spending has 
disproportionally occurred through vehicles that GAO has flagged as 
problematic, such as time-and-material contracts. 

In our view, the draft GAO report presents an incomplete picture of 
the progress made in reducing spending on contracts, because GAO does 
not give proper credit to the Department of Defense's (DOD) reported 
acquisition savings of more than $18 billion. On page 9 of the draft 
report, the GAO states that "it is not possible to accurately 
determine the results of this initiative, in part because ... DOD's 
identified savings ... were solely attributed to budget reductions 
included in the Department's broader, on-going effort to reduce 
spending by $520 billion through 2015, and not necessarily tied to 
contract savings." With disagree with the implication in GAO's 
statements that spending less on contracts is not a contract savings. 
Buying less — such as by ending, de-scoping, or restructuring 
contracts that are missing program goals, duplicative of other 
acquisitions, or no longer required by the mission - is the most basic 
form of contract savings and requires our agency officials to make the 
very types of hard choices that taxpayers should expect of a fiscally 
responsible government. As GAO notes (on page 9 of the draft report). 
PMB supported DOD's "budget-based approach" because its reported 
savings would be "quantifiable and verifiable." To the extent that GAO 
is questioning if DOD's identified savings include funding that falls 
outside of spending on acquisition, DOD's Office of the Comptroller 
has confirmed that the specific initiatives in its reported savings 
are directly related to spending for the acquisition of weapons and 
support systems and services. 

In addition, it is our view that there is no basis for GAO's apparent 
assumption that agency decisions to spend less on contracts were 
outside the scope of OMB's initiative. OMB's July 2009 savings plan 
guidance expressly calls out "savings through reductions in spending" 
as a prime example of the type of savings that may be credited towards 
savings targets. See Attachment 1 of M-09-25, Improving Government 
Acquisition, available at [hyperlink, 
http://www/whitehouse.gov/sites/default/files/omb/assets/memoranda_fy200
9/m-09-25.pdf]. We fully agree with GAO that agencies, including DOD, 
must continue to give high priority to smarter buying practices, such 
as strategic sourcing. In this regard, the Office of Federal
Procurement Policy has been working closely with all major buying 
agencies, including DOD, to increase the use of strategic sourcing as 
a savings tool. Important as those "buying smarter" efforts are, 
however, they should not take away from what GAO acknowledges are 
"concrete" and "commendable" actions by DOD to reduce spending on its 
contracts. For all of these reasons, DOD's contract savings of more 
than $18 billion should be recognized towards achievement of the 
Administration's FY 2010 savings goal of $19 billion. 

Overall, we are concerned that the4 GAO report focuses more on process 
rather then results. In particular, the report highlights 
methodological issues related to measuring the amount of the savings 
that agencies have achieved. We agree that it is important to improve 
in this area, and we are committed to improving the methodology going 
forward, so that the extent of future savings is more clearly 
established. We are troubled, though, that, notwithstanding legitimate 
concerns about how to measure the progress made over the past two 
years, there is a risk that those concerns could obscure the 
importance of the very real progress made. The fact is that the 
Administration's efforts in agencies across the Executive Branch led 
to the government actually decreasing contracting spending last year 
for the first time in 13 years, and that unprecedented progress is not 
in question. 

Again: we appreciate GAO's recognition of the many agency initiatives 
to buy less and buy smarter. As mentioned above, as we move forward, 
we will be adopting GAO's recommendations, where appropriate, in 
particular to address the methodological and recording concerns that 
GAO focused on. We welcome GAO's review as we move forward to expand 
and deepen the contract savings initiative reported on in this report. 

Sincerely, 

Signed by: 

Daniel I. Gordon: 
Administrator: 

[End of section] 

Appendix IV: Comments from the Department of Defense: 

Office Of The Under Secretary Of Defense: 
Acquisition Technology And Logistics: 
3000 Defense Pentagon: 
Washington, DC 20301-3000: 

November 1, 2011: 

Mr. John P. Hutton: 
Director, Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, DC 20548: 

Dear Mr. Hutton: 

Thank you for the opportunity to comment on GAO Draft Report,
GAO-12-57, "Federal Contracting: OMB's Acquisition Savings Initiative 
Had Results, but Improvements Needed", dated November 2011. The draft 
report did not contain specific recommendations for the Department of 
Defense, although it called into question the extent of the 
Department's participation in the initiative. 

The Department participated vigorously in the Office of Management and 
Budget (OMB) Office of Federal Procurement Policy (OFPP) savings 
initiative. We generated contract savings in complete compliance with 
OFPP guidance on savings. As requested by OFPP we have documented 
those savings in MAX that were a result of our commitment to obtain 
greater efficiency and productivity in defense spending. In a number 
of cases our savings were tied to specific contract actions that 
included terminating and restructuring programs that were performing 
poorly or were determined to be in excess of real-world needs. 

The Department worked in close coordination with OMB/OFPP in 
developing its Saving Plan in response to OMB memorandum M-09-25, 
Improving Government Acquisition. The Department's plan was provided 
to OFPP by the Director, Defense Procurement and Acquisition Policy, 
and was prepared in coordination with the Under Secretary of Defense 
(Comptroller). 

We have continued to pursue contract and program savings initiatives, 
the latest being the on-going implementation of AT&L's Better Buying 
Power Initiatives which will result in billions of dollars of savings 
to the taxpayers. 

Sincerely, 

Signed by: 

Shay D. Assad: 
Director, Defense Pricing: 

[End of section] 

Appendix V: Comments from the Department of Homeland Security: 

U.S. Department of Homeland Security: 
Washington, DC 20528: 

September 26, 2011: 

John P. Hutton: 
Director, Acquisition and Sourcing Management: 
441 G Street, NW: 
U.S. Government Accountability Office: 
Washington, DC 20548: 

Re: Draft Report GAO-12-57, "Federal Contracting: OMB's Acquisition 
Savings Initiative Had Some Results, but Improvement Needed" 

Dear Mr. Hutton: 

Thank you for the opportunity to review and comment on this draft 
report. The U.S. Department of Homeland Security (DHS) appreciates the 
U.S. Government Accountability Office's (GAO's) work in planning and 
conducting its review and issuing this report. 

The Department is pleased to note the report's positive acknowledgment 
that the DHS Strategic Sourcing Program Office has identified savings 
of about $347 million in Fiscal Year 2010 through a portfolio of more 
than 300 Department-wide contracts and participation in the General 
Service Administration's Federal Strategic Sourcing Initiative. 
Although the report does not contain any recommendations specifically 
directed at DHS, the Department remains committed to employing a 
variety of acquisition strategies to curb any potential wasteful 
spending and reduce inefficient contracting practices. 

Again, thank you for the opportunity to review and comment on this 
draft report. We look forward to working with you on future Homeland 
Security issues. 

Sincerely, 

Signed by: 

Jim H. Crumpacker: 
Director: 
Departmental GAO-OIG Liaison Office: 

[End of section] 

Appendix VI: Comments from the Department of Health and Human Services: 

Department Of Health & Human Services: 
Office Of The Secretary: 
Assistant Secretary for Legislation: 
Washington, DC 20201: 

September 22, 2011: 

John P. Hutton, Director:  
Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
441 G Street NW: 
Washington, DC 20548: 

Dear Mr. Hutton: 

Attached are comments on the U.S. Government Accountability Office's 
(GAO) draft report entitled, "Federal Contracting: OMB's Acquisition 
Savings Initiative Had Some Results, but Improvements Needed" (GAO-12-
57). 

The Department appreciates the opportunity to review this report prior 
to publication. 

Sincerely, 

Signed by: 

Jim R. Esquea: 
Assistant Secretary for Legislation: 

Attachment: 

[End of letter] 

General Comments Of The Department Of Health And Human Services (HHS) 
On The Government Accountability Offices's (GAO) Draft Report 
Entitled, "Federal Contracting: OMB's Acquisition Savings Initiative 
Had Some Results, But Improvements Needed" (GAO-12-57): 

The Department appreciates the opportunity to review and comment on 
this draft report. 

HHS takes the OMB acquisition savings initiative seriously. 
Information in this report will be used to identify "best practices" 
in planning for, achieving, and reporting on acquisition savings. The 
Department, working with the Heads of Contracting Activity, will 
review and resolve any discrepancies in the data currently posted in 
the MAX system, verifying accurate reporting for Fiscal Years 2010 and 
2011. 

[End of section] 

Appendix VII: Comments from the Department of Labor: 

Note: Page and footnote numbers in the draft report may differ from 
those in this report. 

U.S. Department of Labor: 
Office of the Assistant Secretary for Administration and Management: 
Washington, D.C. 20210: 

Reply to the Attention of: 

September 26 2011: 

Mr. John P. Hutton: 
Director: 
Acquisition and Sourcing Management: 
Government Accountability Office: 
441 G St. NW: 
Washington, D.C. 20548: 

Dear Mr. Hutton: 

Thank you for the opportunity to review and comment on the Draft 
Government Accountability Office (GAO) Report on Federal Contracting: 
OMB's Acquisition Savings Initiative Had Some Results, but 
Improvements Needed (GAO-12-57) (GAO Report). Though the Department of
Labor (DOL) has no comments on the Report's recommendations, we are 
concerned with the reference to our Job Corps program on page 17 of 
the Draft Report: 

Billions of Dollars in Baseline Reductions [starts on page 16]: 

OFPP allowed agencies to propose reductions to their,fiscal year 2008 
spending baselines to reflect what were considered to be spending 
anomalies or significant onetime spending increases. Ultimately, OFPP 
allowed 11 agencies to reduce their baselines against which savings 
would be measured by $34 billion—from about $523 billion to $489 
billion— a reduction of more than 6 percent. This had the effect of 
lowering the agencies' savings targets. For example, Energy had 
proposed reducing its baseline from $24.8 billion to $6.6 billion by 
removing $18.2 billion in contracts associated with the management and 
operations of its national laboratories. This amount represented 73 
percent of Energy's total fiscal year 2008 spending. However, OFPP 
officials instructed the department to reconsider many of its proposed 
reductions, and as a result Energy's adjusted baseline was set at 
$11.0 billion, or 56 percent of its fiscal year 2008 spending.
Energy's baseline adjustment effectively reduced the savings target 
from $868 million (3.5 percent of its original $24.8 billion baseline) 
to 3385 million (3.5 percent of its adjusted baseline of $11.0 
billion). 

We also identified some instances of questionable baseline reductions. 
For example, the Department of Labor excluded $1.1 billion in 
obligations under contracts associated with the Job Corps program--the 
department's largest program, accounting for 61 percent of the 
agency's fiscal year 2008 contract spending., Procurement officials 
told us that, because this program is mandated by Congress, it was not 
appropriate to include these contracts in the department's baseline, 
as savings opportunities would be limited. However, although the
program is mandated, there could still be opportunities to achieve 
savings or improve acquisition practices associated with these 
contracts. Appendix II contains more details on each agency's baseline 
reductions and the effect on their savings goals. 

Footnote 21- Established as part of the Economic Opportunity Act of 
1964, Pub. L. No. 88-452, Job Corps is the nation's largest 
residential, educational, and career technical-training program for 
disadvantaged youths. Job Corps is the most expensive federal fob-
training program, with the cost of each training slot averaging about 
$34,060. 

The Employment and Training Administration's (ETA) Office of Contracts 
Management (OCM), Office of Job Corps (OJC), and Office of Financial 
and Administrative Management (OFAM) have reviewed the Office of 
Management and Budget's (OMB) response to the Department's request to 
have the Job Corps Operational contracts excluded from the 
Department's baseline contract dollars. ETA maintains its position 
that the Job Corps regional operation contracts (Job Corps centers, 
Outreach and Admissions (OA), and Career Transition Services (CTS)) 
should not be included in the DOL pool of contracts to meet the 
Department's reduction targets due to the fact that these contracts 
are Congressionally mandated under the Workforce Investment Act, 29 
U.S.C. § 2881-2901. 

Notwithstanding this congressional mandate, ETA proposes to take steps 
to reduce the level of high risk (cost reimbursement) contracts within 
the Job Corps program. Currently, 100% of Job Corps Regional Operation 
Contracts are cost reimbursement contracts. Over time, ETA will reduce 
risk by gradually converting OA and CTS contracts from cost 
reimbursement to firm-fixed price contracts. OCM, in consultation with 
OJC, will identify the OA/CTS contracts scheduled for re-procurement 
during FY12 that will be awarded as firm fixed price. This deliberate 
process will allow time to review the impact of the transition from 
cost reimbursement to firm fixed price on: 1) performance; 2) funding, 
as firm-fixed price contracts must be funded in their entirety upon 
award and Job Corps receives quarterly apportionments of its program 
funds; and 3) Federal staff workload. The impact of these variables 
will be fully evaluated prior to completely transitioning OA and/or 
CTS contracts. 

Finally, with respect to footnote 21 in the GAO Report, I would like 
to emphasize the fact that Job Corps is one of the most successful 
vocational programs that the federal government is currently funding. 
For example: 

* The annual number of high school diplomas attained by students has 
tripled since 2001. In Program Year 2009, 20,048 students attaining a 
high school diploma or GED. 

* In PY 2009, over 31,681 students, completed career and technical 
training programs in 11 high growth, high demand industry sectors 
encompassing more than 100 occupational offerings. 

* In PY 2009, 76% of graduates were placed in employment or the 
military, or enrolled in postsecondary education. 

* In PY 2009, Job Corps graduates entered the workforce with an 
average hourly wage of $9.22. 

Should you have any questions regarding the Department's response, 
please contact Mr. Al Stewart, Procurement Executive, at 
Stewart.Milton@dol.gov or 202-693-4028. 

Sincerely, 

Signed by: 

T. Michael Kerr: 
Chief Acquisition Officer: 

[End of section] 

Appendix VIII: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

John P. Hutton, (202) 512-4841 or huttonj@gao.gov: 

Staff Acknowledgments: 

Other individuals making key contributions to this report include 
Michele Mackin, Assistant Director; Christopher Kunitz; Peter F. Beck; 
Antoine Clark; Lisa L. Fisher; Julia M. Kennon; Jean McSween; Charles 
W. Perdue; Roxanna T. Sun; and Alyssa B. Weir. 

[End of section] 

Related GAO Products: 

Streamlining Government: Key Practices from Select Efficiency 
Initiatives Should Be Shared Governmentwide. [hyperlink, 
http://www.gao.gov/products/GAO-11-908]. Washington, D.C.: September 
30, 2011. 

Acquisition Planning: Opportunities to Build Strong Foundations for 
Better Services Contracts. [hyperlink, 
http://www.gao.gov/products/GAO-11-672]. Washington, D.C.: August 9, 
2011. 

Federal Contracting: Opportunities Exist to Increase Competition and 
Assess Reasons When Only One Offer Is Received. [hyperlink, 
http://www.gao.gov/products/GAO-10-833]. Washington, D.C.: July 26, 
2010. 

Contracting Strategies: Data and Oversight Problems Hamper 
Opportunities to Leverage Value of Interagency and Enterprisewide 
Contracts. [hyperlink, http://www.gao.gov/products/GAO-10-367]. 
Washington, D.C.: April 29, 2010. 

The Office of Management and Budget's Acquisition Workforce 
Development Strategic Plan for Civilian Agencies. [hyperlink, 
http://www.gao.gov/products/GAO-10-459R]. Washington, D.C.: April 23, 
2010. 

Defense Acquisitions: Managing Risk to Achieve Better Outcomes. 
[hyperlink, http://www.gao.gov/products/GAO-10-374T]. Washington, 
D.C.: January 20, 2010. 

Civilian Agencies' Development and Implementation of Insourcing 
Guidelines. [hyperlink, http://www.gao.gov/products/GAO-10-58R]. 
Washington, D.C.: October 6, 2009. 

Contract Management: Extent of Federal Spending under Cost- 
Reimbursement Contracts Unclear and Key Controls Not Always Used. 
[hyperlink, http://www.gao.gov/products/GAO-09-921]. Washington, D.C.: 
September 30, 2009. 

Contract Management: Agencies Are Not Maximizing Opportunities for 
Competition or Savings under Blanket Purchase Agreements despite 
Significant Increase in Usage. [hyperlink, 
http://www.gao.gov/products/GAO-09-792]. Washington, D.C.: September 
9, 2009. 

Defense Contracting: Army Case Study Delineates Concerns with Use of 
Contractors as Contract Specialists. [hyperlink, 
http://www.gao.gov/products/GAO-08-360]. Washington, D.C.: March 26, 
2008. 

Defense Contracting: Additional Personal Conflict of Interest 
Safeguards Needed for Certain DOD Contractor Employees. [hyperlink, 
http://www.gao.gov/products/GAO-08-169]. Washington, D.C.: March 7, 
2008. 

Best Practices: Increased Focus on Requirements and Oversight Needed 
to Improve DOD's Acquisition Environment and Weapon System Quality. 
[hyperlink, http://www.gao.gov/products/GAO-08-294]. Washington, D.C.: 
February 1, 2008. 

Defense Acquisitions: DOD's Increased Reliance on Service Contractors 
Exacerbates Long-standing Challenges. [hyperlink, 
http://www.gao.gov/products/GAO-08-621T]. Washington, D.C.: January 
23, 2008. 

Federal Acquisition: Oversight Plan Needed to Help Implement 
Acquisition Advisory Panel Recommendations. [hyperlink, 
http://www.gao.gov/products/GAO-08-160]. Washington, D.C.: December 
20, 2007. 

Department of Homeland Security: Ongoing Challenges in Creating an 
Effective Acquisition Organization. [hyperlink, 
http://www.gao.gov/products/GAO-07-948T]. Washington, D.C.: June 7, 
2007. 

Defense Acquisitions: Role of Lead Systems Integrator on Future Combat 
Systems Program Poses Oversight Challenges. [hyperlink, 
http://www.gao.gov/products/GAO-07-380]. Washington, D.C.: June 6, 
2007. 

Defense Acquisitions: Improved Management and Oversight Needed to 
Better Control DOD's Acquisition of Services. [hyperlink, 
http://www.gao.gov/products/GAO-07-832T]. Washington, D.C.: May 10, 
2007. 

Defense Acquisitions: Tailored Approach Needed to Improve Service 
Acquisition Outcomes. [hyperlink, 
http://www.gao.gov/products/GAO-07-20]. Washington, D.C.: November 9, 
2006. 

DOD Acquisitions: Contracting for Better Outcomes. [hyperlink, 
http://www.gao.gov/products/GAO-06-800T]. Washington, D.C.: September 
7, 2006. 

Best Practices: Using Spend Analysis to Help Agencies Take a More 
Strategic Approach to Procurement. [hyperlink, 
http://www.gao.gov/products/GAO-04-870]. Washington D.C.: September 
16, 2004. 

Best Practices: Improved Knowledge of DOD Service Contracts Could 
Reveal Significant Savings. [hyperlink, 
http://www.gao.gov/products/GAO-03-661]. Washington, D.C.: June 9, 
2003. 

[End of section] 

Footnotes: 

[1] MAX is used to support the federal budget process. The system has 
the capability to collect, validate, analyze, model, and publish 
information relating to governmentwide management and budgeting 
activities and can also be used as an information sharing and 
communication portal between government organizations. 

[2] Appendix II contains a listing of the 24 agencies that are subject 
to the CFO Act. 

[3] In this report, we use the term "time-and-materials" to refer to 
both time-and-materials and labor-hour contracts, as labor-hour 
contracts differ from the former only in that the contractor does not 
supply materials. 

[4] OFPP developed its 11 categories of savings strategies as a means 
to help facilitate the sharing of information contained in each 
agency's savings plan, and as a way by which OFPP could quickly find 
agencies that have activities in a particular area. 

[5] GAO, Best Practices: Using Spend Analysis to Help Agencies Take a 
More Strategic Approach to Procurement, [hyperlink, 
http://www.gao.gov/products/GAO-04-870] (Washington, D.C.: Sept. 16, 
2004); Best Practices: Improved Knowledge of DOD Service Contracts 
Could Reveal Significant Savings, [hyperlink, 
http://www.gao.gov/products/GAO-03-661] (Washington, D.C.: June 9, 
2003); Best Practices: Taking a Strategic Approach Could Improve DOD's 
Acquisition of Services, [hyperlink, 
http://www.gao.gov/products/GAO-02-230] (Washington, D.C.: Jan. 18, 
2002). 

[6] GAO, Contract Management: Guidance Needed to Promote Competition 
for Defense Task Orders, [hyperlink, 
http://www.gao.gov/products/GAO-04-874] (Washington, D.C.: July 30, 
2004). 

[7] GAO, Interagency Contracting: Franchise Funds Provide Convenience, 
but Value to DOD is Not Demonstrated, [hyperlink, 
http://www.gao.gov/products/GAO-05-456] (Washington, D.C.: July 29, 
2005); High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-05-207] (Washington, D.C.: January 
2005); Contract Management: Problems with DOD's and Interior's Orders 
to Support Military Operations, [hyperlink, 
http://www.gao.gov/products/GAO-05-201] (Washington, D.C.: Apr. 29, 
2005). 

[8] GAO, Civilian Agencies' Development and Implementation of 
Insourcing Guidelines, [hyperlink, 
http://www.gao.gov/products/GAO-10-58R] (Washington, D.C.: Oct. 6, 
2009); Defense Contracting: Army Case Study Delineates Concerns with 
Use of Contractors as Contract Specialists, [hyperlink, 
http://www.gao.gov/products/GAO-08-360] (Washington, D.C.: Mar. 26, 
2008); Defense Contracting: Additional Personal Conflict of Interest 
Safeguards Needed for Certain DOD Contractor Employees, [hyperlink, 
http://www.gao.gov/products/GAO-08-169] (Washington, D.C.: Mar. 7, 
2008); Defense Acquisitions: DOD's Increased Reliance on Service 
Contractors Exacerbates Long-standing Challenges, [hyperlink, 
http://www.gao.gov/products/GAO-08-621T] (Washington, D.C.: Jan. 23, 
2008); Defense Acquisitions: Role of Lead Systems Integrator on Future 
Combat Systems Program Poses Oversight Challenges, [hyperlink, 
http://www.gao.gov/products/GAO-07-380] (Washington, D.C.: June 6, 
2007). 

[9] GAO, Streamlining Government: Key Practices from Select Efficiency 
Initiatives Should Be Shared Governmentwide, [hyperlink, 
http://www.gao.gov/products/GAO-11-908] (Washington, D.C.: Sept. 30, 
2011). 

[10] In May 2010, the Secretary of Defense directed DOD to undertake a 
departmentwide initiative to assess how the department is staffed, 
organized, and operated with the goal of reducing excess overhead 
costs and reinvesting these savings in sustaining DOD's current force 
structure and modernizing its weapons portfolio. As part of its fiscal 
year 2012 budget request, DOD outlined projected savings of $178 
billion to be realized over a 5 year period beginning in fiscal year 
2012. According to DOD, these savings include projected savings of 
about $154 billion from the Secretary's initiative and about $24 
billion from other sources. GAO has ongoing work in this area. 

[11] The Future Years Defense Program is a submission to Congress that 
provides information on DOD's current and planned outyear budget 
requests. Our analysis also found that DOD's reported savings in MAX 
were $18.6 billion, almost $630 million less than what the 
Comptroller's office had reported to OFPP. An OFPP official explained 
that he had requested that DOD remove seven initiatives from the data 
because the savings associated with those initiatives were the result 
of reductions to recruiting and retention bonuses, and did not involve 
contracting. 

[12] GAO, Defense Acquisitions: Assessments of Selected Weapon 
Programs, [hyperlink, http://www.gao.gov/products/GAO-09-326SP] 
(Washington, D.C.: Mar. 30, 2009). 

[13] We do not know the full extent to which there are overstatements 
in MAX, as we did not conduct a comprehensive review on all 
initiatives that were entered into the system. 

[14] Because we did not conduct a comprehensive review of every 
initiative with reported savings, these examples are illustrative and 
do not constitute the potential universe of questionable savings. 

[15] In January 2004, the President's Vision for Space Exploration 
directed NASA to retire the Space Shuttle by the end of the decade, 
upon completion of key deliverables of the International Space Station. 

[16] Contract closeout is the process that includes ensuring that all 
contract administration actions have been fully and satisfactorily 
accomplished and the contract file documented accordingly. According 
to the Federal Acquisition Regulation (FAR), the process must ensure 
that administrative matters are completed, including deobligating any 
remaining excess funds. See FAR 4.804. 

[17] Energy will generally reimburse contractors at Energy-owned and 
leased facilities the annual minimum required pension contribution 
those contractors must make under the Employee Retirement Income 
Security Act of 1974, as amended. Department of Energy Order 350.1, 
Contractor Human Resource Management Programs (Chg. 3, Feb. 23, 2010). 
The Pension Protection Act of 2006 established benefit restrictions 
for private-sector single-employer plans, including those at Energy-
owned facilities, that apply if a plan's funding level falls below 
certain specified thresholds. Pub. L. No. 109-280, § 103 (codified as 
amended at 29 U.S.C. § 1056(g)). 

[18] GAO, Department of Energy: Progress Made Overseeing the Costs of 
Contractor Postretirement Benefits, but Additional Actions Could Help 
Address Challenges, [hyperlink, 
http://www.gao.gov/products/GAO-11-378] (Washington, D.C.: Apr. 29, 
2011). 

[19] GAO, Warfighter Support: A Cost Comparison of Using State 
Department Employees versus Contractors for Security Services in Iraq, 
[hyperlink, http://www.gao.gov/products/GAO-10-266R] (Washington, 
D.C.: Mar. 4, 2010). Task orders under the Department of State's 
Worldwide Personal Protective Services contract were first issued in 
2004 for provision of personal protective services in Iraq. 

[20] The CAO Council is an interagency forum used for monitoring and 
improving the federal acquisition system. Among other activities, the 
council provides assistance with multiagency projects and innovative 
initiatives, and helps further competition and efficiency in the 
acquisition process. The council is chaired by the Deputy Director for 
Management at OMB. Members include the OFPP Administrator; the Under 
Secretary of Defense for Acquisition, Technology, and Logistics; the 
civilian agency CAOs; senior procurement executives of the military 
departments; and other designated senior agency officials. 

[21] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: November 1999). Internal control is a major part of 
managing an organization. It comprises the plans, methods, and 
procedures used to meet missions, goals, and objectives and, in doing 
so, supports performance-based management. Internal control also 
serves as the first line of defense in safeguarding assets and 
preventing and detecting errors and fraud. 

[22] Established as part of the Economic Opportunity Act of 1964, Pub. 
L. No. 88-452, Job Corps is the nation's largest residential, 
educational, and career technical-training program for disadvantaged 
youths. 

[23] GAO, GAO Cost Estimating and Assessment Guide: Best Practices for 
Developing and Managing Capital Program Costs, [hyperlink, 
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: March 2009). 

[24] The percent reduction was calculated by determining the 
percentage change in the share of base spending (the percent) from 
2009 to 2010. In fiscal year 2009, obligations made on new high-risk 
contracts accounted for 40.58 percent of obligations on all new 
awards, whereas in fiscal year 2010, obligations on new high-risk 
contracts accounted for 40.27 percent of obligations on all new 
awards. Although OMB's initial guidance stated that fiscal year 2008 
spending for new awards should be used as a baseline to measure 
agencies' progress, during the second half of fiscal year 2010, OFPP 
officials changed the baseline year to fiscal year 2009. FPDS-NG data 
show that base spending in fiscal year 2008 was more than base 
spending in fiscal year 2009. OFPP officials indicated the change was 
done in an attempt to better capture trends with more current data. 
Our analysis was based on new awards, including single-award 
indefinite delivery/indefinite quantity contracts, as that was the 
focus of this initiative. 

[25] Our analysis of the share of obligations under new high-risk 
contracts was conducted using OFPP's methodology and FPDS-NG filtering 
variables. Additional information on the methodology is in appendix I. 

[26] These contracts provide for an indefinite quantity, within stated 
limits, of supplies or services during a fixed period, through the 
issuance of orders for individual requirements. FAR 16.504. A single- 
award indefinite delivery/indefinite quantity contract results from a 
solicitation where only one contractor is awarded the contract. 

[27] OMB first reported the results of agencies' risk reduction 
efforts for noncompetitive contract awards and competitive awards 
receiving only one offer in February 2011. Results of agencies' 
efforts to reduce time-and-materials contracts were first reported in 
June 2011, and the results of efforts to reduce use of cost-
reimbursement contracts were reported in July 2011. 

[28] See GAO, Contract Management: Extent of Federal Spending under 
Cost-Reimbursement Contracts Unclear and Key Controls Not Always Used, 
[hyperlink, http://www.gao.gov/products/GAO-09-921] (Washington, D.C.: 
Sept. 30, 2009). In that report, we noted that obligations under 
contracts coded as "combination" had increased significantly. We 
analyzed fiscal year 2008 FPDS-NG obligations coded as combination 
contracts and found that about a quarter of the obligations went to 
contracts that had 50 percent or more cost-reimbursement type 
obligations. We recommended that OFPP reconcile the conflicting 
instructions in the FPDS-NG user manual for coding combination 
contracts versus coding based on the preponderance of contract type. 
Subsequently, effective in fiscal year 2010, the combination contract 
type was removed from FPDS-NG for new awards. 

[29] OFPP's methodology for allocating newly awarded combination 
contracts to cost-reimbursement contracts was based on a previous GAO 
analysis of all fiscal year 2008 obligations made under combination 
contracts. See [hyperlink, http://www.gao.gov/products/GAO-09-921]. As 
discussed above, however, we questioned the use of this approach for 
the high risk reduction effort and requested additional information 
from OFPP. 

[30] We have previously reported on FPDS-NG errors regarding the 
extent of competition, including obligations coded as having received 
one offer. See GAO, Federal Contracting: Opportunities Exist to 
Increase Competition and Assess Reasons When Only One Offer Is 
Received, [hyperlink, http://www.gao.gov/products/GAO-10-833] 
(Washington, D.C.: July 26, 2010), where we reported that about 18 
percent of the 107 contracts and orders we reviewed had been 
incorrectly coded. 

[31] DOD accounted for 60 percent of all high-risk obligations made on 
competitive solicitations having been awarded after receiving only one 
offer. Recognizing the need for increased and effective competition, 
the Director of Defense Procurement and Acquisition Policy issued 
guidance in April 2011 to address this issue. Specifically, the 
guidance instructs that unless an exception applies or a waiver is 
granted, contracting officers are to cancel and resolicit competitive 
procurements for at least 30 days where, after being advertised for 30 
days or less, only one offer was received. In addition, in instances 
where only one offer is received after 30 days of advertisement, the 
guidance states that contracting officers shall use proposal analysis 
techniques in accordance with FAR 15.404-1 to make a determination 
that the offer was fair and reasonable. 

[32] [hyperlink, http://www.gao.gov/products/GAO-09-921]. 

[33] Proper Use and Management of Cost-Reimbursement Contracts, 76 
Fed. Reg. 14,543 (Mar. 16, 2011). See also, FAR 7.105(b)(5)(iv). 

[34] [hyperlink, http://www.gao.gov/products/GAO-10-833]. Also see FAR 
16.505(b)(2). Other reasons for allowing a noncompetitive task order 
are that the requirement is a logical follow-on, or the order is 
needed to meet a minimum guarantee. 

[35] See [hyperlink, http://www.gao.gov/products/GAO-10-833] and 
[hyperlink, http://www.gao.gov/products/GAO-09-792]. See also, FAR, 
Subpart 8.4-Federal Supply Schedules. 

[36] See GAO, Acquisition Planning: Opportunities to Build Strong 
Foundations for Better Services Contracts, [hyperlink, 
http://www.gao.gov/products/GAO-11-672] (Washington, D.C.: Aug. 9, 
2011) and Defense Acquisitions: Managing Risk to Achieve Better 
Outcomes, [hyperlink, http://www.gao.gov/products/GAO-10-374T] 
(Washington, D.C.: Jan. 20, 2010). 

[37] See GAO, Defense Acquisitions: Tailored Approach Needed to 
Improve Service Acquisition Outcomes, [hyperlink, 
http://www.gao.gov/products/GAO-07-20] (Washington, D.C.: Nov. 9, 
2006); Department of Homeland Security: Ongoing Challenges in Creating 
an Effective Acquisition Organization, [hyperlink, 
http://www.gao.gov/products/GAO-07-948T] (Washington, D.C.: June 7, 
2007). 

[38] See [hyperlink, http://www.gao.gov/products/GAO-07-20]; GAO, 
Federal Acquisition: Oversight Plan Needed to Help Implement 
Acquisition Advisory Panel Recommendations, GAO-08-160 (Washington, 
D.C.: Dec. 20, 2007). 

[39] See GAO, Mortgage Financing: Financial Condition of FHA's Mutual 
Mortgage Insurance Fund, [hyperlink, 
http://www.gao.gov/products/GAO-10-1066T] (Washington, D.C.: Sept. 23, 
2010). 

[40] See [hyperlink, http://www.gao.gov/products/GAO-10-374T]. 

[41] See GAO, Best Practices: Improved Knowledge of DOD Service 
Contracts Could Reveal Significant Savings [hyperlink, 
http://www.gao.gov/products/GAO-03-661] (Washington, D.C.: June 9, 
2003) and [hyperlink, http://www.gao.gov/products/GAO-04-870]. 

[42] The bureau uses air ambulatory services to provide transportation 
of prisoners to hospitals. 

[43] Since 2006, OMB has encouraged agencies to coordinate their buys 
through Federal Strategic Sourcing Initiative interagency procurement 
vehicles awarded by GSA. Current contracts under this initiative 
include express and ground domestic delivery services, wireless 
telecommunications expense-management services, and office supplies. 

[44] See [hyperlink, http://www.gao.gov/products/GAO-07-20]. 

[45] See GAO, Department of Energy: Additional Opportunities Exist for 
Reducing Laboratory Contractors' Support Costs, [hyperlink, 
http://www.gao.gov/products/GAO-05-897] (Washington, D.C.: Sept. 9, 
2005). Specifically, GAO recommended that Energy take actions to 
improve cost data among laboratories and reduce support costs by 
ensuring that Energy laboratories adopt important cost saving 
initiatives. These recommendations are further supported by FAR 
guidance, which suggests that collaborative efforts might be 
advantageous in larger-scale research and development contracts and 
projects (FAR 9.602(b)). 

[46] See GAO, Defense Acquisitions: Improved Management and Oversight 
Needed to Better Control DOD's Acquisition of Services, [hyperlink, 
http://www.gao.gov/products/GAO-07-832T] (Washington, D.C.: May 10, 
2007). 

[47] Management and Operating contracts are agreements under which the 
government contracts for the operation, maintenance, or support of a 
government-owned or controlled research, development, special 
production or testing establishment devoted to one or more major 
programs. Infrastructures supported under these agreements include 
production facilities for nuclear materials, research facilities, and 
national laboratories. Department of Energy Acquisition Regulation, 
Subpart 917.6 and Part 970. 

[48] See [hyperlink, http://www.gao.gov/products/GAO-10-833] and 
[hyperlink, http://www.gao.gov/products/GAO-09-792]. 

[49] See [hyperlink, http://www.gao.gov/products/GAO-07-832T]. 

[50] See GAO, The Office of Management and Budget's Acquisition 
Workforce Development Strategic Plan for Civilian Agencies, 
[hyperlink, http://www.gao.gov/products/GAO-10-459R] (Washington, 
D.C.: Apr. 23, 2010). 

[51] The federal government has an annual goal of awarding not less 
than 23 percent of prime contract dollars to small businesses. 

[52] [hyperlink, http://www.gao.gov/products/GAO-07-20]. 

[53] [hyperlink, http://www.gao.gov/products/GAO-10-266R]. 

[End of section] 

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