ES, IG-98-029, Outsourcing of Desktop Computers

OUTSOURCING OF DESKTOP COMPUTERS
IG-98-029

Executive Summary

Introduction
In December 1996, NASA decided to outsource its desktop computers, local area networks, and user support services. NASA based its decision, in significant part, on the results of its outsourcing study referred to as the Business Case analysis. On June 17, 1998, NASA announced the competitive selection of seven vendors who were later awarded indefinite-delivery, indefinite-quantity contracts. NASA Centers may now select vendors to provide desktop services without further competition but are required to provide fair consideration to the vendors under the established delivery order selection process. ⁽¹⁾

Objective
The overall objective of the audit was to determine the adequacy of NASA's outsourcing study. ⁽²⁾ Specifically, our objective was to determine whether NASA had:

based its outsourcing analysis on current, accurate, complete, and relevant cost data;
used appropriate and consistent methodology in analyzing the various options; and
adequately considered alternatives to outsourcing.
Appendix A contains details on the scope and methodology.

Results of Audit
NASA has not ensured the adequacy or consistency of cost data to be used to place outsourcing delivery orders. After completing the Business Case analysis, which supported outsourcing, NASA updated the available cost data on outsourcing desktop computers, through successive iterations, to support each phase of the competitive procurement process. NASA used the updated data to assess the Agency-wide benefits of outsourcing. However, NASA has not issued guidance on preparing reliable cost estimates in support of delivery order placement. Without consistently prepared and reliable estimates of the costs of the Government activities to be outsourced, the Centers may be unable to make well-informed decisions on the type and extent of outsourcing services they should acquire, particularly with regard to services other than general-purpose computing (for example, intra-Center communications). Also, Centers may be unable to reliably compare the costs of doing business with the eligible vendors or to determine the total amount of savings actually achieved through outsourcing.

Recommendation
We recommended that the NASA Chief Information Officer (CIO) require Centers to develop Government cost estimates for use in determining the type and extent of outsourcing services to be acquired. We also recommended that the CIO issue detailed guidance for the Centers to use in developing their cost estimates.

Management's Response and Evaluation of the Response
In lieu of requiring each Center to develop cost estimates, the ODIN Program Office is developing Center-specific cost baselines with the full support and participation of the Centers. We consider this action responsive to the recommendation.

FOOTNOTES

1. The Office of Space Flight is planning to award delivery orders to a common vendor for the work at multiple NASA Centers.

2. We have issued two additional products that resulted from this audit. See Appendix C for additional information.

Introduction	In December 1996, NASA decided to outsource its desktop computers, local area networks, and user support services. NASA based its decision, in significant part, on the results of its outsourcing study referred to as the Business Case analysis. On June 17, 1998, NASA announced the competitive selection of seven vendors who were later awarded indefinite-delivery, indefinite-quantity contracts. NASA Centers may now select vendors to provide desktop services without further competition but are required to provide fair consideration to the vendors under the established delivery order selection process. ⁽¹⁾
Objective	The overall objective of the audit was to determine the adequacy of NASA's outsourcing study. ⁽²⁾ Specifically, our objective was to determine whether NASA had: based its outsourcing analysis on current, accurate, complete, and relevant cost data; used appropriate and consistent methodology in analyzing the various options; and adequately considered alternatives to outsourcing. Appendix A contains details on the scope and methodology.
Results of Audit	NASA has not ensured the adequacy or consistency of cost data to be used to place outsourcing delivery orders. After completing the Business Case analysis, which supported outsourcing, NASA updated the available cost data on outsourcing desktop computers, through successive iterations, to support each phase of the competitive procurement process. NASA used the updated data to assess the Agency-wide benefits of outsourcing. However, NASA has not issued guidance on preparing reliable cost estimates in support of delivery order placement. Without consistently prepared and reliable estimates of the costs of the Government activities to be outsourced, the Centers may be unable to make well-informed decisions on the type and extent of outsourcing services they should acquire, particularly with regard to services other than general-purpose computing (for example, intra-Center communications). Also, Centers may be unable to reliably compare the costs of doing business with the eligible vendors or to determine the total amount of savings actually achieved through outsourcing.
Recommendation	We recommended that the NASA Chief Information Officer (CIO) require Centers to develop Government cost estimates for use in determining the type and extent of outsourcing services to be acquired. We also recommended that the CIO issue detailed guidance for the Centers to use in developing their cost estimates.
Management's Response and Evaluation of the Response	In lieu of requiring each Center to develop cost estimates, the ODIN Program Office is developing Center-specific cost baselines with the full support and participation of the Centers. We consider this action responsive to the recommendation.