Getting a Good Deal — How to Do Federal Contracting Right

photo of hardhat and blueprintsOliver Hart and Bengt Holmström won the 2016 Nobel Prize for Economics for their contributions to contract theory—which looks at how contract incentives help resolve conflicts of interest between parties.

And, as anyone who’s hired a contractor knows, ensuring that a job is done right (and that you get a good deal) isn’t always easy. In fact, we see these challenges all the time in our work—the federal government bought about $440 billion of goods and services in recent years—and we urge agencies to follow good contracting principles to save money and get better outcomes.

So, in honor of this Saturday’s Nobel Prize award ceremony, today’s WatchBlog explores some challenges we’ve encountered in our work on federal contracts.

Is it a good deal?

Competition between firms is a cornerstone of the federal government’s approach to contracting, but it isn’t always possible—for example, sometimes only one manufacturer can provide the parts and services for airplanes, vehicles, and other equipment the government already owns.

We found that, in these cases, DOD often sought additional information from the contractors (e.g., by asking about the cost of materials or labor) to determine if it was getting a good deal. Unfortunately, contractors were not always willing to share this information, which is a challenge to ensuring that these contracts are fair and reasonable.

A bridge too far?

When an existing contract is set to expire, and the new contract is not yet ready, agencies can extend the existing contract. And, while these “bridge contracts” can be necessary tools to avoid gaps in service, they are also awarded without competition—which may mean that the government is paying too much for them.

Figure 3: Timeline for Army Computer Support Services Contract

(Excerpted from GAO-16-15)

We reviewed these bridge contracts, and found that most agencies couldn’t adequately identify or monitor these contracts. We recommended that the Office of Federal Procurement Policy define bridge contracts and provide guidance on tracking and managing their use.

A High Risk Issue

High Risk star: DOD Contract ManagementDOD obligates more than $300 billion annually on contracts for goods and services, including major weapon systems, support for military bases, IT, consulting services, and commercial items.  And we and others have identified a range of issues with how DOD manages those contracts, such as with the size and composition of DOD’s acquisition workforce.

As a result, DOD contract management is on our High Risk List, which highlights programs at risk for fraud, waste, abuse, and mismanagement, or that need fundamental transformation.

We have seen some progress at DOD, such as a sustained leadership commitment to fixing its contracting issues.

However, DOD must continue to ensure that it has the people, skills, capacities, tools, and data it needs to make informed acquisition decisions to carry out its mission, especially in an era of more constrained resources.

For more information on federal contracting, visit our website. And keep an eye out for our 2017 update to our High Risk List, expected to be issued in February, for how DOD has performed since our last update.

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Health Care for Women Veterans (podcast)

GAO Podcast IconThe Department of Veterans Affairs has policies intended to help ensure the privacy, safety, and dignity of women veterans when they receive medical care at its facilities. For example, exam rooms must have privacy curtains and exam tables must face away from doors. In 2010, we found weaknesses in these areas—have things gotten better since then?

A team led by Randy Williamson, a director in our Health Care team, recently looked at the extent to which certain VA facilities were complying with these policies, and found room for improvement. Listen to Randy explain what they found.


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Elder Abuse by Guardians (podcast)

GAO Podcast IconWhen an older adult becomes incapable of making informed decisions, a state may appoint a guardian with the authority to make decisions on that person’s behalf. While many guardians make these personal and financial decisions in good faith, some have been reported to abuse the person in their care.

A team led by Kathy Larin, a director in our Forensic Audits and Investigative Services team, recently looked into the extent of such abuse, and what’s being done to protect older Americans. Listen to Kathy explain what they found.


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Tackling the Tax Code – How the IRS Communicates with Taxpayers

photo of a tax formThe tax code is complex, so taxpayers rely on the IRS to help them understand and follow the law. But the IRS publishes thousands of guidance documents a year, so where should taxpayers start? As we near the end of the tax year, today’s WatchBlog takes a closer look at how the IRS explains the tax code and taxpayers’ responsibilities.

Sorting through it all

The IRS informs taxpayers of changes in tax law through the Internal Revenue Bulletin—a weekly publication containing a variety of guidance materials, notices, and announcements.

Along with the Bulletin, the IRS issues and maintains several other “plain language” sources of tax law information for the public, including:

  • Forms, instructions, and publications for taxpayers to use in preparing their returns
  • News releases, fact sheets, and tax tips
  • Instructional audio and video presentations, and
  • Various other online tools and resources

And for more complicated tax questions or issues, taxpayers may seek private, binding rulings directly from the IRS.

All that tax information is great, but with so many resources it can be tough for taxpayers to separate the helpful hints from their legal tax responsibilities.

Hierarchy of Authority for IRS Guidance and Other Information Sources

Hierarchy of Authority for IRS Guidance and Other Information Sources

(Excerpted from GAO-16-720)

We recently reviewed how the IRS communicates tax law changes and responsibilities to the public, and how it decides what type of guidance to issue.

We found that—unlike most other federal agencies—the IRS considers the guidance issued in its weekly Bulletin to be legally binding. So, of all the guidance the IRS issues, the Bulletin is the authoritative source for tax law changes and responsibilities.

While the other non-Bulletin materials and resources may be useful to you as you complete your taxes, you can’t rely on them as authoritative resources. But how would you know that? To help taxpayers, we recommended that the IRS more clearly identify this limitation on its non-Bulletin materials and resources.

To read more about ways the IRS might increase taxpayers’ knowledge and confidence about the tax system, check out our full report.

  • Questions on the content of this post? Contact James R. McTigue, Jr. at
  • Comments on GAO’s WatchBlog? Contact
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401(k) Eligibility and Vesting Policies (podcast)

GAO Podcast IconMillions of Americans depend on their 401(k) retirement plans to sustain them through their later years. It’s money they’ve been setting aside from their paychecks, and in some cases their employers have kicked in funds as well. But not all 401(k) plans are the same, and differing policies regarding eligibility requirements and employer contributions can have a big impact on workers’ retirement savings.

Listen to Charlie Jeszeck, a director in our Education, Workforce, and Income Security team, discuss some of the policies employers offer, and how they might affect employees’ retirement savings.


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Achieving Financial Benefits—One Action at a Time

Duplication iconSince 2011, we’ve outlined actions federal agencies and Congress can take to reduce fragmentation, overlap, and duplication in federal programs and activities—work that resulted in $56 billion in financial benefits to the federal government between fiscal years 2010 and 2015 (with an additional $69 billion expected through 2025).

November 15 marked our annual update to our Action Tracker, the online tool we use to monitor these actions. Today’s WatchBlog shares some highlights from our latest update.

Taking action

When we find fragmentation, overlap, and duplication, we alert the relevant agency and/or Congress about actions that can fix the problem. In our latest update, we closed 36 actions because they were resolved by federal agencies and/or Congress.

For example, as a result of our work:

  • The Centers for Medicare & Medicaid Services updated their software and databases to help weed out ineligible providers—for example, those with ineligible practice locations or who have lost their medical licenses. These updates could help CMS prevent ineligible providers from billing Medicare billions of dollars.
  • IRS streamlined its intake and review process for whistleblower claims, which will help the agency review more claims from tax whistleblowers—those who report when others are underpaying taxes. This can also help the IRS more quickly collect potentially billions of dollars in unpaid taxes.
  • The Department of the Treasury reduced its estimates for the Making Home Affordable Program—which helps eligible borrowers avoid foreclosure by lowering their monthly payments—from $29.8 billion to $25.1 billion, and reduced expected costs by deobligating $2 billion from the program in February 2016.

Data, two ways

If you want to take a look for yourself at the newly closed actions or the ones that are still open, visit our Action Tracker webpage.

Alternately, our new downloadable Action Tracker spreadsheet lets you sort and compare these actions for yourself—check it out here.

Duplication, overlap, and fragmentation

  • Questions on the content of this post? Contact Charles Young at
  • Comments on GAO’s WatchBlog? Contact
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Vehicle Safety – A Closer Look

thumbnail_transportationDriving is one of the riskiest things most Americans do. There were more than 5.5 million vehicle crashes in the U.S. in 2013—killing more than 32,000 people and injuring another 2.3 million.

You may remember getting your car inspected for safety, but car condition is a factor in only 2-7% of U.S. crashes according to the Department of Transportation.

In fact, drunk driving, speeding, weather, distracted driving, road conditions, and many other factors contribute to road safety. So, what does this mean for vehicle inspection programs? For Sunday’s World Day of Remembrance for Road Traffic Victims, we’re sharing some of what we found from our 2015 review.

A history of safety inspections

Vehicle safety inspections used to be fairly common across the country. In 1975, more than 30 states and the District of Columbia required drivers to periodically have their cars inspected. Back then, states without inspection programs risked having some highway funds withheld by the Department of Transportation. But in 1976 the laws about withholding funding changed, and as of 2015 only 16 states continued to have vehicle safety inspection programs.

Figure 2: States with Vehicle Safety Inspection Programs, July 2015(Excerpted from GAO-15-705)

Yet some states that had safety inspection programs later eliminated them because they couldn’t show that they were working. For example, before the District of Columbia eliminated its program, it analyzed crash data and found that most accidents resulted from driver behavior—not vehicle mechanical failure. And a New Jersey official told us the state couldn’t justify the $17 million annual costs of its inspection program since there was no conclusive data on its effectiveness.

For states with vehicle inspection programs, the National Highway Safety Transportation Administration sets mandatory minimum inspection criteria for vehicle brakes, steering, suspension, tires, and wheel assemblies. However, NHSTA officials told us they take a hands-off approach to state vehicle inspection programs, instead focusing on areas that contribute more heavily to crashes, such as driver behavior.

Do safer vehicles=safer roads?

Transportation officials in 15 of the 16 states with vehicle safety inspection programs said it was difficult to parse out the exact costs and effects of their programs. For example, safety inspection costs may be combined with costs from other inspection programs, such as emissions. And inspections aren’t states’ only safety measures—enforcing state traffic safety laws could also influence crash rates.

However, officials from all 15 states told us that safety inspections can

  • identify vehicles with safety problems, and
  • result in repairs or removals of unsafe vehicles from the roads.

For example, in Pennsylvania, nearly 530,000 cars, motorcycles, and other vehicles—about 20% of all the vehicles in the state—failed inspection in 2014 and then underwent repairs. Virginia officials felt their roadways were safer because their program identified safety problems in 19% of the state’s 7.5 million vehicles in 2014.

Figure 3: Estimated Number of Crashes Related to Vehicle Component Failure, 2009—2013(Excerpted from GAO-15-705)

New technologies, new criteria, new challenges

According to a majority of officials we spoke with, one state inspection challenge is how to inspect new technologies. For example, LED brake lights have multiple light-emitting diodes, but states lack guidance on the number of broken diodes it takes to render a brake light unsafe. State officials told us they would like NHTSA to weigh in so they can set appropriate pass/fail standards for LED brake lights.

Figure 4: Diagram of a Light-Emitting Diode (LED) light.(Excerpted from GAO-15-705)

In 2015 we recommended that DOT better communicate with state safety inspection officials and respond to their questions. DOT agreed and has already taken action to do so.

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The Insights and Analyses from Mapping Data

GAO logoGeographic information systems (GIS) are powerful tools that display spatial information (such as locations on a map) in order to help us understand patterns and relationships about our world.

So, with National GIS Day on November 16th, the WatchBlog is looking at how this technology helps us communicate clearly and answer complex questions about loan programs, Amtrak service, and more.

Using GIS to identify…

When we wrote a report on the safety and health conditions of 185 Bureau of Indian Education elementary and secondary schools at 180 locations around the United States, we wanted to show our readers where, exactly, the schools in question were located.

The GIS map we created for the report gives readers a sense that the schools are located primarily in rural areas and small towns. The map also sets the stage for our finding that 15 BIE schools with dormitories are located in remote areas where the nearest fire station is an average of 35 miles away.

The information in this map helps convey the urgency of addressing the poor safety conditions we found:

Figure 1: Locations of Bureau of Indian Education Schools by Bureau of Indian Affairs Region(Excerpted from GAO-16-313)

…and analyze

The real power of GIS lies in its ability to compare many types of geographic data to examine how they relate to each other.

For example, we looked at two home loan guarantee programs administered by the Rural Housing Service and the Federal Housing Administration. The GIS maps we made showed us that the way the Rural Housing Service defines “rural” areas for the purposes of loan eligibility is much broader than the way that other agencies define “rural” areas.

With 97% of U.S. land area (and 37% of the population) qualifying as “rural” for Rural Housing Service loans, it is easy to see on the maps how that program might overlap significantly with the Federal Housing Administration program, which doesn’t have any geographic limits.

Figure 2: Rural and Urban Areas in the United States Based on the Statutory Definition and Rural-Urban Commuting Areas Definition, Fiscal Year 2015  (Excerpted from GAO-16-801)

Another example is from a recent report on Amtrak. To understand the competition Amtrak faces from other modes of travel in rural areas, we used GIS to estimate the number of other transportation options (i.e., bus or air travel) within a 30-minute driving radius of each Amtrak station on its long-distance routes.

We found that about 70% of rural Amtrak stations are located within a reasonable driving time of one or more alternative transportation options. Mapping this information can show where Amtrak faces competition on its network of routes, and where to conduct more analysis of its scheduling and operations.

You can see this in our interactive graphic of one of Amtrak’s long-distance routes. It shows which Amtrak stations offer limited, late-night arrival and departure times and if they are close to other travel options, such as intercity buses. To use the interactive features of the graphic, download the report PDF, go to p.65, and roll your mouse over stations on the map.

Figure 11: Case Study of a Largely Rural Long-distance Route: Amtrak’s Southwest Chief with Rollovers for Rural Stations(Excerpted from GAO-16-67)

To explore these and other reports, please visit our website at

  • Questions on the content of this post? Contact Vijay D’Souza at
  • Comments on GAO’s WatchBlog? Contact
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GAO’s 2016 Performance and Accountability Report—Over $63 Billion in Financial Benefits

cover of 2016 Performance and Accountability ReportOnce a year we like to share the results of our work with you, the taxpayer. This year our audit work produced over $63 billion in financial benefits. In other words, for every $1 Congress invested in us, we returned $112.

And we don’t just work to save you money—we work to improve government effectiveness. This year, we recommended more than 1,200 ways that the federal government could improve operations. How? Among other things, by prompting federal agencies to better:

  • protect U.S. diplomatic personnel and their families overseas
  • prepare for domestic chemical, biological, radiological, nuclear, or high-yield explosive attacks, and
  • prevent payment errors in Medicare.

Our reviews and investigations touched on a wide range of federal programs—involving nearly every federal agency—and our experts were called upon to testify before Congress over 100 times.

But money talks—so back to dollars and cents. In this year’s report, we’re happy to share that our recommendations helped:

  • reduce Medicare Advantage’s payment errors by about $21.4 billion between 2010 and 2014
  • reduce Veterans’ Affairs procurement costs by about $3.6 billion between 2013 and 2015, and
  • improve how DOD estimates its fuel costs and reduce expenses by about $2.3 billion.

Our 2016 Performance and Accountability Report has the full details on what we accomplished in the past fiscal year, information on how we calculate results and find savings, and what’s on the horizon for next year.

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Preparing the Next Leaders

thumbnail businessThe elections are over and new leaders are assembling staff, setting priorities, and preparing to tackle major issues facing the nation.

What do these leaders and their staff need to know to hit the ground running in January?

Our Management Agenda provides high-level information about the critical management challenges facing the federal government—and what needs to happen to address those challenges. Continue reading

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