Summary: The federal government spent nearly $12 billion in fiscal year 1992 on advisory and service contracts. An analysis of studies done by GAO, the Energy Department, and the Defense Department suggests that cost comparisons can be useful in deciding how to acquire needed services in the most cost effective way. Federal agencies are not now required to do such cost comparisons in deciding whether to contract for advisory and assistance services. Although the nine studies GAO reviewed indicate that it may be less expensive in some cases if services were done by federal workers rather than by contractors, all of the studies had limitations. The studies also varied in the extent to which they incorporated all possible cost factors. In addition to cost, GAO believes that agencies should consider other factors in deciding whether to contract out for advisory services, including quality, timeliness, the technical skills of federal employees, and the duration of the work to be done. GAO notes that a potential conflict exists between the administration's objectives of (1) giving federal managers the flexibility to obtain needed services from the best possible source and (2) downsizing the federal workforce.
