In fiscal year 2001, DOD reportedly obligated more than $6.2  billion on IT services alone. Our November 2001 report recognizes the importance of such  sourcing decisions and provides a framework that spans the full range of  activities that are performed during IT services outsourcing. GAO’s Framework for Outsourcing IT Services

Outsourcing of IT services has become increasingly popular in both the  public and private sector. Projects Substantially Used Leading Commercial Practices

As illustrated in figure 4, the five IT services projects substantially used  leading commercial practices. In addition, collectively the projects fully implemented 88 percent of the  practices (see table 3). Phase I: Determine sourcing strategy. Phase II: Define operational model. Phase III: Develop the contract. Phase IV: Select the provider(s). Phase V: Transition to provider(s). Phase VII: Ensure services are provided. Although outsourcing  transfers responsibility for performing the service to the provider(s), the  client organization is ultimately responsible for ensuring that services  are provided and that end-user needs are met. Although DOD has taken action to gather and disseminate lessons learned  and best practices on general acquisition issues, these efforts generally do  not focus on outsourcing or include sharing the lessons learned from IT  outsourcing projects across the department. Lessons learned  that are pragmatic and easily accessible could give DOD managers a more  informed understanding of the important issues to be addressed when  making outsourcing decisions, as well as the factors to be considered to  help ensure the success of these endeavors. Objectives, Scope, and Methodology

Our objectives were to determine (1) the extent to which selected  Department of Defense (DOD) information technology (IT) services  outsourcing projects use leading commercial practices as specified in our  framework and (2) whether DOD is sharing lessons learned from its IT  outsourcing projects across the department. Projects’ Implementation of Phase VI: Manage Provider(s) Performance

The effectiveness with which the performance of the provider(s) is  managed—the focus of this phase—is critical to the successful  implementation of an outsourcing project.
Why GAO Did This Study

Given the magnitude of its reported spending on information technology (IT) services--more than $6.2 billion in fiscal year 2001--it is critical that the Department of Defense (DOD) adopt effective practices for acquiring IT services. GAO researched leading commercial practices for the outsourcing of IT services, and, in November 2001, published a framework consisting of seven phases that span the full range of activities that are performed during the outsourcing of those services (this is an acquisition in which a client organization transfers responsibility for performing services to an external provider). GAO was asked to determine (1) the extent to which selected DOD projects for outsourcing IT services use leading commercial practices as specified in GAO's framework and (2) whether DOD is sharing lessons learned from its IT outsourcing projects across the department.

What GAO Found

The projects in GAO's review substantially used leading commercial practices as specified in GAO's framework for outsourcing IT services. Specifically, the agencies fully implemented 88 percent of the practices (not including practices not applicable to a particular project). This framework consists of practices organized into seven phases: (I) determine sourcing strategy, (II) define operational model, (III) develop the contract, (IV) select the provider(s), (V) transition to provider(s), (VI) manage the performance of the provider(s), and (VII) ensure services are provided. Although DOD has acted on gathering and disseminating lessons learned and commercial leading practices related to general acquisition issues, its actions have generally not been focused on outsourcing or on sharing the lessons learned from IT services outsourcing across the department. By not systematically capturing and disseminating such information across the department, DOD is losing the opportunity to leverage the knowledge gained on IT services projects like those in GAO's review. Lessons learned that are pragmatic and easily accessible would give DOD managers a more informed understanding of important issues to be addressed when making outsourcing decisions, as well as the factors to be considered to help ensure the success of these endeavors.