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GAO-11-538R 1 (2011-05-27)

handle is hein.gao/gaobaanyj0001 and id is 1 raw text is: i ~GAO Accountabilty I ntegity Reliabiity United States Government Accountability Office Washington, DC 20548 May 27, 2011 Congressional Committees Subject: OMB Service Contracts Inventory Guidance and Implementation Federal agencies rely on a multisector workforce of federal employees and contractor personnel to perform services needed to carry out their missions. Determining whether to obtain services through insourcing with current or new federal employees, outsourcing with private-sector contractors, or sourcing with a combination of the two is an important economic and strategic decision essential to the federal government's effective and efficient use of taxpayer dollars. Since fiscal year 2006, civilian agencies have obligated over $100 billion annually to obtain a range of services from contractors. Almost 80 percent of contract obligations made by civilian agencies in fiscal year 2010 were for service contracts. Since the mid- 1950s, the executive branch has encouraged federal agencies to obtain commercially available services from the private sector when outsourcing is cost effective. In 2009, however, the President issued a memorandum on government contracting that expressed concern about whether agencies have become overly reliant 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. 2 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 appropriate. Over the last several years, Congress too has been concerned with agencies' reliance on contractors and has directed OMB and other federal agencies to examine issues related to the multisector workforce. For example, the Conference Report accompanying the Consolidated Appropriation Act for fiscal year 2010 cited the need for agencies to have complete and reliable information on the extent of their reliance on service contractors to help determine the proper use and balance of public 'The White House memorandum, Government Contracting (Mar. 4, 2009). 2Inherently governmental functions, as a matter of policy, are so intimately related to the public interest as to require performance by government employees, and include functions that require discretion in applying government authority or value judgments in making decisions for the government. Federal Acquisition Regulation (FAR) 7.503(c) provides examples of such functions. Closely associated with inherently governmental functions are those that, while not inherently governmental, may approach the category because of the nature of the function, the manner in which the contractor performs the contract, or the manner in which the government administers performance under a contract. FAR 7.503(d) provides examples of such functions. GAO-1 1-538R Civilian Agency Service Contracts Inventory Page I

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