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LCD-76-350 1 (1976-10-22)

handle is hein.gao/gaobaabzz0001 and id is 1 raw text is: <RESTRND - ot to be released oeicide V-% ^-- Accouni -A c., !!. ~~, O 7 * by the O-t-w- ' f .1W ... I7 * &~WASHING'roN. D.C Zm ~ l~al 11 ', B-168700 OCT 2 2 1976 The Honorable Dominick V. Danielsj IlI IlhI Souse of Representatives LM101102 Dear Mr. Daniels: This is in response to your request for a review of the Army's Military Traffic Management Command's proposal to contract for all cargo handling at the Military Ocean Ter- minal, Bayonne, New Jersey. As agreed with you on May 19, 1976, we limited our review to evaluating the Army Audit Agency's methodology for analyzing Army studies. These studies were used to justify contracting for work which was previously done by civil service personnel. BACKGROUND Army practice at the Bayonne terminal had been to proc- ess cargo both by contractor (about 88 percent) and by civil service personnel (about 12 percent). In February 1975 the Traffic Command completed a study to determine whether the mixed operation should be continued or whether the entire cargo handling operation could be performed more economically by the private sector. The decision to study this was in accordance with the Federal policy of relying on the private enterprise system to the maximum extent for products and services. That policy is set forth in the Office of Management and Budget circular A-76, which states that agencies should rely on private enterprise to supply their needs, except where it is in the interest of the Government to provide directly the products and services they use. One of the criteria which permits an agency to continue to provide a service in-house is that use of the private sector would result in much higher costs to the Government. Continuing an activity in- house should ordinarily be shown to cost the Government at l4ast 10 percent less than contracting for that-activity. A decision to continue to provide a service in-house, for rea- sons of cost, must be supported by a comparative cost analy- sis. The Traffic Command's study concluded that use of the private sector was more economical, and it requested the Army Audit Agency to review its conclusion. LCD-76-350 14 1 1

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