Inspector general to audit massive FAA outsourcing effort

Drop of $500 million in anticipated savings is among items to be reviewed.

The Transportation Department inspector general soon will launch an audit of a contract awarded last year through the government's largest-ever public-private job competition at a civilian agency, including a closer look at a $500 million drop in the contract's anticipated savings, department officials said this week.

In a memorandum issued on Monday, the inspector general's office announced the review to examine the transition from federal employee to contractor operations of 58 Federal Aviation Administration flight service centers across the country. The centers employed roughly 2,500 federal workers at the time of the outsourcing decision. Lockheed Martin Corp., the winner of the contract, plans to consolidate operations into 20 facilities.

The audit will assess the plans for transition, whether the contract is achieving the anticipated savings, and the extent to which the needs of general aviation pilots using the flight service stations are being met, the IG office announced.

Explaining the impetus for the audit, IG spokesman David Barnes said, "While FAA has experience with outsourcing air traffic control services on a limited scale, this is significantly larger in scope."

He said the review was initiated out of consideration for the program's importance to the agency, the savings anticipated, the agency's limited experience with outsourcing and congressional interest in the subject. It was not requested by legislators.

Among other issues, the IG office plans to look into changes in projections for how much the agency expects to save. When the contract was awarded, FAA announced that private sector performance would save the government $2.2 billion over the life of the contract, based on a 10-year estimate for the 5-year base period with up to five extension years. In its announcement of the audit this week, the inspector general's office quoted an anticipated savings of $1.7 billion.

"We are aware of the difference and will be looking into this as part of our review," Barnes told Government Executive.

"If this is an honest-to-goodness audit, then I'm thrilled," said Kate Breen, president of the National Association of Air Traffic Specialists, which represented the federal employees at the centers. She said the competition for the work, which was run under the Office of Management and Budget's Circular A-76 rules, and the appeals process at the time, seemed slanted in favor of the contractor.

An OMB official said this is the first formal audit of an A-76 award that the office is aware of. But the circular "requires that agencies monitor the implementation of their awards made pursuant to public-private competition on an ongoing basis, regardless of the selected service provider," said the official, who asked to remain anonymous.

The official said some agencies have taken their own measures to validate results of completed competitions, with each establishing its own procedure. Some of those rely on agency inspectors general, while others use contractors or an agency office other than the one that conducted the competition.

The official underlined that the agency, and not OMB, is responsible for FAA's audit.

Transportation's Barnes said his office will conduct the audit by reviewing records, interviewing officials with FAA and Lockheed, visiting service stations and communicating with the general aviation community. That process will begin soon with an FAA meeting, he said.