Progress in Assessing Core Functions Has Varied Across the Defense Components and Has Been Affected Somewhat by Definitions of “Core”

Progress in assessing core functions has been varied and limited across  the major Defense components, and affected by somewhat ambiguous and  subjective definitions of what constitutes a “core function.” These multiple  and somewhat ambiguous definitions of what is a “core function” have  made it difficult for the components to easily employ the core competency  approach to decision-making, and some DOD components have sought  additional guidance and/or applied their own criteria to identify core  functions. That notwithstanding, the definition of  core remains somewhat broad in nature and subjective, and will likely  remain so in the future. In making its decisions, Army officials determined that medical activities  could be considered core in some circumstances and non-core in others. Additional factors must also be considered. Air Force officials told us that moving the military  personnel out of non-core functions is a high priority, but because of the  high cost involved in adding funds to the operations and maintenance  appropriation account to pay for replacement civilian or contractor  positions, it is currently an unfunded priority. Some Progress Made in Identifying Alternative Sourcing Arrangements, but the Extent to Which Alternatives Are Likely to Be Used Is Unclear

The range of alternatives to A-76 likely to be pursued under the core  competency-based approach is not yet clear given limitations in the core  analyses, but DOD has made some progress toward identifying and/or  using some sourcing arrangements that are alternatives to A-76. At the same time, some DOD  officials indicated that the use of some alternatives could be limited  without special legislative authorities and/or repeal of various existing  prohibitions. The use of alternative sourcing could also be affected by the  emphasis on A-76 competitions and OMB’s goals for the department. Alternate Sourcing Approaches Identified through Pilot Projects and Other Initiatives

DOD has made some progress in identifying and using sourcing  arrangements that are alternatives to A-76, including some as part of an  initiative to identify alternatives through use of pilot projects, and a few  others that have been identified by the services as they have focused on  the core initiative. For example, the department plans to transfer its personnel security  investigations function, now performed by the Defense Security Service  to the Office of Personnel Management. For DOD,  this represents approximately 226,000 positions. Recently, DOD’s study goals have increased because of  OMB’s competitive sourcing goals. To meet OMB’s goal of directly  converting or studying 15 percent of the 453,000 commercial activity  positions identified in the 2000 FAIR Act inventories by the end of fiscal  year 2003, DOD would need to complete A-76 studies on about  68,000 positions between fiscal year 2000 and the end of fiscal year 2003. Specifically, the objectives of this report were to assess (1) the  department’s progress in assessing its core functions as a basis for  sourcing decisions, (2) the plans and progress DOD has made in  identifying and implementing alternatives to A-76, and (3) the current  status of DOD’s A-76 program.
Why GAO Did This Study

The Department of Defense (DOD) is pursuing a new initiative involving a core competency approach for making sourcing decisions--that is, sourcing decisions based on whether the function is core to the agency's warfighting mission. In determining how to best perform non-core functions, DOD's position is that its components should look beyond just the use of public-private competitions under Office of Management and Budget (OMB) Circular A-76 in making sourcing decisions, and consider other alternatives such as partnering or employee stock ownership. GAO was asked to assess (1) the department's progress in assessing its core functions as a basis for sourcing decisions, (2) the plans and progress DOD has made in identifying and implementing alternatives to A-76, and (3) the current status of DOD's A-76 program.

What GAO Found

Progress in assessing core functions has been varied and limited across major Defense components, affected somewhat by ambiguous definitions of the term "core function." In some instances additional guidance was obtained, but definitions of core remain somewhat broad and subjective, and will likely remain so in the future. Army and Air Force have led within DOD in assessing core functions, but the Army has done the most, and found, contrary to its expectations, that distinguishing between core and non-core functions does not, by itself, prescribe a sourcing decision. Other factors must also be considered such as risk and operational considerations. The range of alternatives to A-76 likely to be pursued under the core competency-based approach is not yet clear, but DOD has made some progress toward identifying and/or using some alternatives through pilot projects and other efforts by the services as they have focused on the core initiative. However, the use of alternatives could be limited without special legislative authorities and/or repeal of various existing prohibitions, and some could be tempered by the department's efforts to meet the A-76 competitive sourcing goals set by OMB. DOD reported that as of June 1, 2003, it has met OMB's short-term goal to use the A-76 process to study 15 percent of the positions identified in DOD's commercial activities inventory by the end of fiscal year 2003. However, meeting the longer-term goal to study at least 50 percent (226,000) of its nearly 453,000 commercial activity positions through fiscal year 2008 will present a challenge. This is nearly double the number of positions that DOD has previously studied during a comparable time period, and providing sufficient resources (financial and technical) to complete the studies may prove challenging. Also, the defense components, particularly the Air Force, plan to transfer certain military personnel into warfighting functions and replace them with government civilian and/or contractor personnel. This will require the components to reprioritize their funding for operation and maintenance accounts, because it is from those accounts the services must fund replacement civilian or contractor personnel.