GAO: Agencies don't measure pluses of outsourcing

Federal agencies are not sufficiently tracking their desktop outsourcing projects to measure whether they are achieving savings or other benefits, according to a General Accounting Office report released April 29.

After examining seat management projects at six agencies, the GAO concluded that, although all six had achieved positive results, it "could not determine whether they were achieving expected costs and benefits," because the agencies had not conducted adequate pre-seat management analyses nor tracked all actual costs and benefits.

"Specifically, agencies did not sufficiently analyze their baseline and projected costs and benefits upfront and monitor actual implementation results," the report said. "Without such critical information, an agency is not positioned to make well-informed decisions about seat management options or able to convincingly demonstrate real results."

The report, "Desktop Outsourcing: Positive Results Reported, but Analyses Could Be Strengthened," was requested by the House Government Reform Committee's subcommittee on technology and procurement policy.

The report stipulated that although the six agencies were monitoring contractor costs, they did not count internal costs created by seat management contracts.

One example the report gave was from NASA's Kennedy Space Center, which reported that the cost of salaries and benefits associated with four seat management implementations in July 2001 ran about $146,000. Over the life of the contract, that could cost the agency about $5.3 million, the GAO reported.

But the report also said cost cutting was not the primary reason for outsourcing. Agencies said they outsourced to improve IT management, improving end-user support and obtaining new technology. But these were factors not closely enough monitored, either, the report said.

The GAO recommended that agencies put into place a system to accurately measure the costs and benefits of seat management.

"Like any other major IT investment, seat management initiatives should be supported by a well-developed business case that evaluates the expected returns against the costs. An explicit understanding of the expected costs and benefits up front provides the basis for a sound financial and strategic decision, and creates a baseline against which managers and executives can measure progress," the report said.

The GAO examined six seat management contracts from three different contract vehicles.

Under the General Service Administration's seat management contract, the GAO looked at work tasked by the Peace Corps. and the Treasury Department.

Under GSA's Federal Supply Schedule, it looked at the work tasked by the Defense Logistics Agency and the Bureau of Alcohol, Tobacco and Firearms.

And under NASA's Outsourcing Desktop Initiative, the GAO looked at work performed for NASA and for the Centers for Medicare and Medicaid Services.

All the contracts had been in effect more than one year and all had at least 500 seats.

The report is available at the GAO Web site, www.gao.gov/cgi-bin/getrpt?GAO-02-329.