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GAO-10-58R 1 (2009-10-06)

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        Accountabilty  I ntegrity   ReiaiMity
United States Government Accountability Office
Washington, DC 20548


           October 6, 2009


           Congressional Committees


           Subject: Civilian Agencies' Development and Implementation of Insourcing Guidelines

           Federal agencies rely on a multisector workforce composed of federal employees and
           contractor personnel to perform services as they carry out their missions. Determining
           whether to obtain services through insourcing with current or new federal employees,
           outsourcing with private sector contractors, or cosourcing with a combination of the two is
           an important economic and strategic decision critical to the federal government's effective
           and efficient use of taxpayer dollars. The executive branch has encouraged federal agencies
           since the mid-1950s to obtain commercially available services from the private sector when
           outsourcing is cost-effective. In the last 5 fiscal years, civilian agencies have on average
           annually obligated about $100 billion to obtain a range of services from contractors.
           However, in March 2009, the President issued a memorandum on government contracting
           that, among other matters, expressed concern about the federal workforce as to whether
           agencies have become overreliant on contractors and have appropriately outsourced
           services. In particular, the President noted that the line between inherently governmental
           functions-those that must be performed by federal employees-and commercial activities
           that may be contracted for has been blurred. In the memorandum, the President directed the
           Office of Management and Budget (OMB) to lead a series of contracting-related efforts,
           including clarifying when outsourcing for services is and is not appropriate.

           Congress, also concerned with the federal workforce, in March 2009 enacted section 736 of
           the Omnibus Appropriations Act, 2009,1 which requires federal agencies, with the exception
           of the Department of Defense (DOD), to devise and implement guidelines for insourcing new
           and contracted-out functions by mid-July 2009. The statute further requires that we report on
           the implementation of section 736. In response, we identified (1) the actions taken by OMB to
           assist affected agencies as they develop insourcing guidelines and (2) the status of selected
           civilian agencies' efforts to develop and implement insourcing guidelines.

           To address our objectives, we interviewed and reviewed information provided by officials
           from OMB and nine agencies on the status of their insourcing efforts pursuant to section 736.
           The nine agencies were selected because they collectively accounted for about 80 percent of
           the fiscal year 2008 funds obligated on service contracts by civilian agencies.2 In addition, we
           reviewed OMB's guidance issued in July 2009 as to whether it is consistent with statutory
           requirements for executive agencies' guidelines. We conducted our work from July 2009 to
           October 2009 in accordance with generally accepted government auditing standards. Those
           standards require that we plan and perform the audit to obtain sufficient, appropriate

           1Onmibus Appropriations Act, 2009, Pub. L. No. 111-8, Division D, Title VII, Section 736.
           'The nine agencies were the Departments of Energy, Health and Human Services, Homeland Security, Justice,
           State, Transportation, and Veterans Affairs, as well as the General Services Administration and the National
           Aeronautics and Space Administration (NASA).
                                                                 GAO-10-58R Insourcing Guidelines

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