Share-in-savings not tested, GAO says

Share-in-Savings Initiative Not Yet Tested

More than two years after the E-Government Act of 2002 authorized share-in-savings contracts, the Office of Management and Budget has not issued guidance or implementing regulations.

A new Government Accountability Office report states that share-in-savings contracting, in which contractors are paid based on the amount of money they save for agencies rather than a flat fee, remains largely unused and untested.

OMB has promised to issue implementing regulations and guidance soon, according to the report. Agencies that GAO auditors interviewed listed several reasons that they have not used share-in-savings contracts, including:

n A lack of implementing regulations.

n Difficulty determining the baseline costs that savings could be calculated against.

n A belief that the contracts don't offer enough return on investment to be worthwhile.

n Concerns among agency officials that they would still have to have appropriated funds to cover cancellation or contract termination liability.

n Too few acquisition employees who have adequate training in using share-in-savings contracts.

GAO reports that a General Services Administration Web-based tool for aiding agencies in identifying suitable uses for share-in-savings contracts and producing the required business cases had been used more than 200 times between its 2003 launch and March 2005. Those uses resulted in 15 business cases being deemed as potential share-in-savings opportunities, but no contracts resulted.

GSA has established a share-in-savings program office and awarded blanket purchase agreements to companies to be used for share-in-savings procurements. But no agencies have used those BPAs, according to the GAO report.