Oct 26 2015

GAO Report Finds Inefficiencies in Duplicate IT Contracts

Agencies would benefit from better IT spending, study claims.

The federal government has been pushed to update its IT systems is for the sake of efficiency. Peak performance can’t be achieved if money is being wasted. A report from the Government Accountability Office (GAO) found that federal agencies used large portions of the $30 billion U.S. IT acquisition budget on duplicate contracts.

The GAO’s findings were published as part of its Strategic Sourcing: Opportunities Exist to Better Manage Information Technology Services Spending study. The study was conducted because the GAO noticed that the government wasn’t using all of its buying power in areas such as IT. Furthermore, it determined that NASA, the Department of Homeland Security and the Department of Defense were using the favored strategic sourcing contracts to manage just 10 to 44 percent of spending, FedScoop reports. For industry leaders, the number is roughly 90 percent. More strategic sourcing will help the agencies reach their full potential, the stated:

Contracting officials from the agencies GAO reviewed generally had limited insights into the labor rates paid for similar IT services. GAO's analysis of 30 contract actions for similar IT services in fiscal year 2013 found that the agencies paid widely varying labor rates for similar services with the same contractors. The average difference between the lowest and highest labor rate for the categories GAO reviewed was 62 percent, in part due to geographic or work location, unique security, education or skill requirements, and the contractor unit performing the work.


Further, for the 30 contract actions for IT services that GAO reviewed, the two contractors proposed more than 117 discrete labor categories—some with multiple variations—which complicated efforts to compare labor rates. Prior GAO reports on leading commercial practices have noted that companies use standardized labor categories for IT services to enable comparison of labor rates and ultimately realize cost savings. Several government-wide and agency-specific efforts to address aspects of these challenges, including providing tools to assess labor rate variations or streamlining labor categories, are under development or in their early implementation stages.

The GAO ultimately recommended that the agencies monitor and analyze their spending and then develop savings goals based on those findings — a plan that each agency has agreed with. If these steps are followed, the agencies could save up to $4.5 billion annually. That’s supposed to be one of the major benefits of improved IT: Saving money.


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