Circular A-76 and the Moratorium on DOD Competitions: Background and Issues for Congress

Valerie Bailey Grasso
Specialist in Defense Acquisition

This report discusses the current moratorium on the conduct of Department of Defense (DOD) public-private competitions under Office of Management and Budget (OMB) Circular A-76 and issues for Congress.

There is a long-standing public debate over the conduct of A-76 competitions. The policy of the government relying on the private sector for the performance of commercial services was first initiated by the Bureau of the Budget during the Eisenhower Administration. OMB Circular A- 76, first issued in 1966, defines federal policy for determining whether recurring commercial activities should be performed by the private sector or federal employees. The Circular has been revised several times; the latest revision was released in 2003.

Public debate over A-76 policy ignited in February 2007 as a result of a series of articles in the Washington Post on the conditions at the former Walter Reed Army Medical Center in Washington, DC. The articles led to several investigations, resignations of some senior Army officials, congressional hearings, and legislation passed by Congress to prohibit the conduct of A- 76 competitions at military medical facilities. Congress passed legislation in Public Law (P.L.) 110-181, the National Defense Authorization Act for Fiscal Year (FY) 2008 to suspend DOD public-private competitions under OMB Circular A-76. Congress also passed legislation in P.L. 111-8, the Omnibus Appropriations Act for FY2009, to halt the beginning of any new A-76 competitions throughout the rest of the federal government. The government-wide moratorium has continued to the present. Section 733 of H.R. 2434, the proposed Financial Services and General Government Appropriations Act for FY2012, would prohibit funds from being used to begin or announce a study or public-private competition regarding the conversion to contractor performance of any function performed by Federal employees pursuant to Office of Management and Budget Circular A-76 or any other administrative regulation, directive, or policy.

Congress has directed the completion of several reports before the moratorium can be lifted. The congressionally-required reports are the “Section 325” report which DOD was required to submit to Congress within 30 days of the enactment of the FY2010 National Defense Authorization Act, the DOD Inspector General’s report on issues involving DOD’s conduct of A-76 competitions, and two Government Accountability Office (GAO) reports: one on DOD’s conduct of publicprivate competitions, and the other on DOD’s inventory of service contracts. All of these reports have been completed except the GAO assessment on the inventory of service contracts.

Some policymakers advocate an end to the moratorium on the conduct of DOD A-76 competitions. Questions about the moratorium are largely centered around to what extent the problems identified with Circular A-76 have been corrected, and whether the congressionally required reports have been completed and the issues resolved to the satisfaction of Congress.


Date of Report: January 18, 2012
Number of Pages: 35
Order Number: R40854
Price: $29.95

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