Walter Reed Army Medical Center (WRAMC) and Office of Management and Budget (OMB) Circular A-76: Implications for the Future
Walter Reed Army Medical Center (WRAMC) and
Office of Management and Budget (OMB) Circular
A-76: Implications for the Future
Updated August 20, 2008
Valerie Bailey Grasso
Specialist in Defense Acquisition Policy
Foreign Affairs, Defense, and Trade Division
Walter Reed Army Medical Center (WRAMC) and
Office of Management and Budget (OMB) Circular
A-76: Implications for the Future
This report examines the issues surrounding the Walter Reed public-private
competition conducted under Office of Management and Budget (OMB) Circular A-
Circular A-76 is a policy and a process first initiated in 1966 that was designed to
determine whether federal employees or private sector contractors are best to perform
activities deemed commercial. A series of articles that first appeared in the
Washington Post chronicled the dilapidated conditions and the substandard medical
treatment afforded to returning veterans. Media reports surrounding the competition
have suggested that one possible contributing factor to the Walter Reed controversy
was the decision to privatize base support services.
What caused the problems at Walter Reed? To what extent were the problems
related to the A-76 competition? Did it go badly because A-76 is an inherently
flawed policy, or was it a convergence of events? Should Congress draw any
conclusions from the outcome of the Walter Reed competition for future
competitions on military medical facilities? While it may be hard to draw
conclusions of cause and effect, there may be lessons learned applicable to future
Some have suggested that constrained Army resources, due to a convergence of
events, may have caused and/or contributed to the problems in the competition and
led to the attrition of skilled base support services staff. Other factors that may have
affected the process were the entry of the United States into combat operations in Iraq
and Afghanistan, a 2005 Base Realignment and Closure Commission
recommendation for the consolidation of Army and Navy military medical services
into a single tertiary hospital at the campus of the Bethesda Naval Hospital
(effectively closing the Walter Reed campus), a surge in the number of outpatient
medical care visits for veterans returning from the war, and the Army’s push to
achieve the Bush Administration’s competitive sourcing goals.
P.L. 110-181, the FY2008 National Defense Authorization Act (NDAA),
includes several provisions that affect A-76 competitions. H.R. 5658, the House-
passed version of the FY2009 NDAA, contains several new provisions which could
impact the conduct of future competitions, including Section 321, which would limit
the conduct of A-76 competitions to 540 days (about 18 months); Section 322, which
would require the analysis and development of a single government-wide definition
for the term “inherently governmental function;” and Section 325, which would
temporarily suspend DOD A-76 competitions and prevent the conversion of civilian
functions to performance by contractors.
This report will be updated as events warrant.
In troduction ......................................................1
What Is OMB Circular A-76?....................................3
Major New Developments.......................................4
The Performance Work Statement (PWS) Team and the Most Efficient
Competitive Sourcing Goals Under the Bush Administration............6
Key Events in the WRAMC A-76 Competition.........................10
The Role of the Independent Review Group........................12
Panel Conclusions and Recommendations.....................12
The Army’s Perspective........................................13
Competition Took over Six Years................................15
Observations About the Length of the Competition..............16
Attrition of Skilled Base Operating Support Staff................17
Cost Comparison Between the Government MEO and the Contractor....18
Implications for Future Competitive Sourcing..........................20
Options for Congress..............................................22
Require Specific Reporting on the Status of Ongoing A-76 Competitions
Prohibit the Establishment of Numerical Quotas for A-76 studies.......23
Declare All Activities at Military Medical Facilities to Be Inherently
Governm ent al ...........................................23
Prohibit the Inclusion of Health Care and Retirement Costs from the A-76
Cost Comparison Process..................................24
Establish a Team of Acquisition Professionals to Rotate Service as Agency
Require an Enforcement of the A-76 Rules.........................25
Grant Federal Employees the Same Rights as Private Sector Contractors.25
Encourage Alternatives to A-76..................................26
Cancel A-76 Studies Under the Pre-2003 Circular...................27
Appendix A .....................................................28
Walter Reed Army Medical Center
(WRAMC) and Office of Management and
Budget (OMB) Circular A-76: Implications
for the Future
The Walter Reed Army Medical Center (WRAMC) was the subject of a
controversy that called attention to several issues, including the policy and process
governing the conduct of OMB Circular A-76 competitions, the state of the military1
health care system, and a planned Base Realignment and Closure (BRAC) action.
A series of articles that first appeared in the Washington Post chronicled the
dilapidated conditions and substandard outpatient treatment given to some returning
veterans. The articles were written by two Washington Post reporters who conducted
a four-month investigation on the campus reportedly without the knowledge or
permission of Army officials.2 Since their investigation, WRAMC was the subject
of several investigations and congressional hearings. The investigations have
focused primarily on the military health care system, yet another important element
of this situation is the outcome of the U.S. Army’s decision to conduct a public-
private competition (or competition) for base support services under Circular A-76.3
Some media reports had suggested that one of the factors that may have caused or
contributed to the substandard conditions, existing at some of the facilities at Walter4
Reed, was the push to privatize base support services.
1 The 2005 Defense Base Realignment and Closure (BRAC) Commission recommended that
DOD establish a new Walter Reed National Military Medical Center (WRNMMC) on the
site of the current National Naval Medical Center (NNMC) in Bethesda, Maryland. For
further information, see CRS Report RL34055, Walter Reed Army Medical Center:
Realignment Under BRAC 2005 and Options for Congress, by Daniel H. Else and JoAnne
2 Priest, Dana and Hull, Ann. “Soldiers Face Neglect, Frustration at Army’s Top Medical
Facility.” Washington Post, February 18, 2007, p. A01.
3 Several different individuals and opinions represented the Army in this competition. From
media reports and other records, the varying perspectives of the Army included (1) Army
Medical Command (MEDCOM) at Fort Sam Houston in San Antonio, TX; (2) WRAMC
management officials General Weightman, Garrison Commander Garabaldi, and Deputy
Garrison Commander King; (3) Attorneys at the GAO protests; (4) Army Audit Agency; and
(5) senior Army leadership.
4 Mandel, Jenny. “Officials Say Outsourcing Partly to Blame for Walter Reed Failures.”
Government Executive, March 5, 2007.
Competitive sourcing through managed competitions was a major initiative of
the first-term Bush Administration’s Presidential Management Agenda, and one of
five government-wide initiatives to improve the management and performance of the
federal government.5 In 2003, the Bush Administration revised the Circular as a
recommendation of the Commercial Activities Panel.6 Army Vice Chief of Staff
General Richard Cody testified that the Army accepted full responsibility for the
substandard conditions and that being on the BRAC list did not give WRAMC
priority for repairs or building replacement.7 Several Members of Congress
introduced legislation to either cancel the WRAMC A-76 competition or prohibit the
appropriation of funds for the conduct of future studies at military medical facilities.
As a result of the issues raised at WRAMC, both private and public sectors have
identified flaws in this competition specifically, as well as in the policies governing
This report will examine the issues surrounding the WRAMC public-private
competition conducted under OMB Circular A-76 and discuss some options that
Congress may want to consider in its oversight role. The WRAMC competition
raised questions that are likely to shape competitions for years to come; lessons
learned may help Congress to determine whether A-76 cost-comparison studies are
the most appropriate way to achieve costs savings and efficiencies in the activities
of the federal government. Several legislative provisions in H.R. 4986, the proposed
FY2008 NDAA, would impact the conduct of future competitions.
The Army has since announced its plan to cancel all its competitions at its
medical facilities for 2007 and 2008. Prior to this decision, future competitions were
already planned for various Army facilities, including Fort Detrick (Maryland), and
the range of activities would have included base operations support, pharmacy,
radiology, pathology and ambulance services, at Fort Detrick and other locations.8
5 For a discussion on OMB Circular A-76, see CRS Report RL32017, Office of Management
and Budget Circular A-76: Selected Issues, by L. Elaine Halchin.
6 Section 832 of the FY2001 National Defense Authorization Act (Public Law 106-398)
directed the Comptroller General to “convene a panel of experts to study the policies and
procedures governing the transfer of commercial activities for the Federal Government from
Government personnel to a Federal contractor, including : (1) procedures for determining
whether functions should continue to be performed by Government personnel; (2)
procedures for comparing the costs of performance of functions by Government personnel
and the costs of performance of functions by Federal contractors; (3) implementation by the
Department of Defense of the Federal Activities Inventory Reform Act of 1998 (Public Law
105 — 270; 31 U.S.C. 501 note); and (4) procedures of the Department of Defense for
public-private competitions pursuant to the Office of Management and Budget Circular A
7 Kennedy, Kelly. “Injured Troops Describe Woes at Reed Hearing.” Military News, March
8 Castelli, Elise. “Army cancels job competitions at medical facilities.” Army Times
Publishing Company, April 23, 2007, pg. 5.
What Is OMB Circular A-76?
The 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. In addition to the Circular, a companion piece
of legislation called the Federal Activities Inventory Reform (FAIR) Act of 19989
requires Federal agencies, on an annual basis, to prepare and submit inventories of
their commercial activities performed by Federal employees to the Office of
Management and Budget (OMB).
The Circular requires federal executive agencies to prepare annually lists of
activities that are considered both commercial and inherently governmental. In
general, commercial activities are subject to competition, while inherently
governmental activities are not. The determination of how activities are classified
ultimately depends on several factors. The Circular describes what makes activities
An inherently governmental activity is an activity that is so intimately related to
the public interest as to mandate performance by government personnel. These
activities require the exercise of substantial discretion in applying government
authority and/or in making decisions for the government. Inherently
governmental activities normally fall into two categories: the exercise of
sovereign government authority or the establishment of procedures and processes
related to the oversight of monetary transactions or entitlements. An inherently
governmental activity involves: (1) binding the United States to take or not to
take some action by contract, policy, regulation, authorization, order, or
otherwise; (2) determining, protecting, and advancing economic, political,
territorial, property, or other interests by military or diplomatic action, civil or
criminal judicial proceedings, contract management, or otherwise; (3)
significantly affecting the life, liberty, or property of private persons; or (4)
exerting ultimate control over the acquisition, use, or disposition of United States
property (real or personal, tangible or intangible), including establishing policies
or procedures for the collection, control, or disbursement of appropriated and10
other federal funds.
The Circular was revised in 2003 at the recommendation of a Commercial
Activities Panel (CAP). CAP also recommended abolishing OMB Circular A-76 and
replacing it with an “integrated competition process” based on a combining of
elements of Federal Acquisition Regulations (FAR) and the A-76 Circular.
In general, many federal employees and labor organizations believe that the A-
76 process is unfairly slanted in favor of the private sector, while private sector
contractors generally believe that government employees have an unfair advantage
in A-76 competitions. For example, among some A-76 observers, the attrition of
skilled personnel may be viewed differently. The National Treasury Employees’
Union (NTEU) President Colleen Kelley blamed the exodus of key personnel at
9 P.L. 105-270.
10 OMB Circular A-76, Performance of Commercial Activities, revised May 29, 2003.
[ ht t p: / / www.whi t e house.gov/ omb/ ci r c ul ar s/ a076/ a76_i ncl _t ech_cor r ect i on.ht ml ]
WRAMC to conditions which were “a not-at-all surprising result of the federal
contracting process that drives experienced federal employees from their jobs and
seeks to replace them with unaccountable private contractors.”11 However, another
observer, President of the Professional Services Council (PSC) Stan Soloway stated
that Walter Reed’s deterioration reflected on WRAMC’s poor management
capability, and not the work of the contractor. The issues at WRAMC, he said, “are
resources and facility capability, long-standing problems that may have caused
federal employees to leave in the first place.”12 He points out that the contractor at
WRAMC cannot be held accountable because it did not begin contract work until
February 4, 2007.13
Major New Developments
H.R. 5658, the House-passed version of the FY2009 National Defense
Authorization bill, has a provision (Section 2721) that would halt the closure of the
Walter Reed Army Medical Center and discontinue the construction at the National
Naval Medical Center and Fort Belvoir, VA of replacement facilities (beyond the
construction necessary to complete the foundations of the replacement facilities) until
the Secretary of Defense certifies to the congressional defense committees that each
of the conditions imposed has been satisfied, and a period of seven days has expired
following the date on which the certification is received by the committees.14
Another provision in the bill (Section 325) would temporarily suspend the conduct
of future DOD public-private competitions (regarding the conversion of functions
performed by DOD civilians to performance by contractors) from the date of the
enactment of the bill until September 30, 2011.
S. 3001, the Senate-proposed version of the FY2009 National Defense
Authorization bill, has a provision (Section 1101) that requires DOD to develop a
strategic human capital plan designed to improve the civilian acquisition workforce.
As part of this provision, DOD would be prohibited from conducting any public-
private competition under A-76 or any other law or regulation without first
addressing the filling of “gaps” in the current workforce.15
P.L. 110-181, the FY2008 NDAA (H.R. 4986), was signed by the President on
January 28, 2008. The bill contains several provisions that affect the conduct of
future public-private competitions as described here.
11 Statement from Colleen Kelley, NTEU
12 Statement of Stan Soloway, Professional Services Council.
13 An interview with an official from IAP Worldwide Services was held on April 23, 2007.
14 H.R. 5658, Section 2721. Conditions on Closure of Walter Reed Army Medical Hospital
and Relocation of Operations to National Naval Medical Center and Fort Belvoir.
15 Section 1101(f) (2) refers to such gaps in the workforce as shortcomings in the number
of employees possessing certain skills and competencies, as well as shortcomings in the
availability of those skills and competencies.
!Section 322 requires that retirement costs be compared and that any
potential retirement and health insurance benefits offered by
potential contractors be comparable to current benefits.
!Section 323 amends 10 U.S.C. 2461 by not requiring DOD to
automatically conduct a public-private competition under OMB
Circular A-76, or any other provision of law, at the end of a
!Section 324 provides for the insourcing16 of certain new and
contracted out functions, including Section 2463 which requires the
Under Secretary of Defense for Personnel and Readiness to prescribe
guidelines and procedures to ensure that federal employees are
considered to perform work currently performed by contractors; the
provision also requires that special consideration be granted to
certain activities, including those activities associated with the
performance of inherently governmental functions.
!Section 325 limits the influence of the Office of Personnel
Management (OPM) over DOD’s conduct of public-private
competitions or direct conversions.
!Section 326 amends the definition of who is an “interested party”
and grants bid protest rights to those employee representatives who
are designated as the agent for the majority of affected employees.
!Section 3557 grants certain authority to the Comptroller General to
expedite actions in protests of public-private competitions under
Circular A-76, and grants other rights to interested parties.
!Section 327 amends the Office of Federal Procurement Policy Act
by requiring that a public-private competition be conducted (for
executive agency functions performed by 10 or more agency civilian
employees) before any activities may be converted to performance
by contractors, with certain conditions.
!Section 1676 prohibits the announcement or conduct of any at
military medical facilities, unless certain conditions are met.
The Performance Work Statement (PWS) Team and the Most
Efficient Organization (MEO)
Once a business case analysis has been performed to determine if the work
should be subject to competition, a Performance Work Statement (PWS) team
develops a statement of the work to be performed. The statement is used as the basis
16 Insourcing is the opposite of outsourcing; functions previously performed by contractors,
as well new functions resulting from new requirements, may be considered for performance
by federal civilian employees.
for the competition. An agency must insure that both the government’s bid proposal
and the private sector contractor’s proposal reflect all of the functions and personnel
called for in the Performance Work Statement.
The Most Efficient Organization (MEO) is developed by a team made up of
federal employees and a private sector contractor. The team is usually made up of
managers and bargaining unit employees who have knowledge of the tasks to be
performed. For that reason, and to insure that there is fairness in the competition, the
rules call for a “firewall” that would prohibit all communication between members
of the MEO and members serving on the Performance Work Statement (PWS) team.
The MEO is comprised of a group of federal employees, and management’s bid
to perform the work. It represents a streamlined reorganization of personnel, fewer
people doing the work. If the MEO wins a competition, it takes over the work of the
existing government function. The MEO does not exist unless it wins the
competition. When the MEO wins a competition, a letter of obligation implements
the decision; when a contractor wins a competition, a contract is awarded.17
The A-76 policy establishes a minimum cost differential, meaning that no
activities can be converted to or from performance by in-house federal employees to
the private sector unless there is a minimal cost differential of $10 million or 10%.
This means that in order to win the competition, the MEO is required to show a
savings of at least $10 million or 10% over the private sector contractor’s costs. The
minimum cost differential is established so that the Government will not convert to
contractor performance for “marginal estimated savings.”18
Competitive Sourcing Goals Under the Bush Administration
Competitive sourcing through managed competition was a major initiative
identified in 2001 by the first-term Bush Administration’s Presidential Management
Agenda (PMA) and one of five government-wide initiatives to improve the
management and performance of the federal government.19 The scorecard identifies
a list of requirements used to evaluate the performance of each federal agency.
Progress on each initiative is charted using a red-yellow-green stoplight indicator
called a “scorecard” with green as the highest score and red as the lowest score.20
OMB has implemented a progress management scorecard to communicate the PMA
17 According to the A-76 Supplemental Handbook, “The Most Efficient Organization (MEO)
refers to the Government’s in-house organization to perform a commercial activity. It may
include a mix of Federal employees and contract support. It is the basis for all Government
costs entered on the Cost Comparison Form. The Most Efficient Organization (MEO) is the
product of the Management Plan and is based upon the Performance Work Statement
18 OMB, Circular A-76 (Part II, Preparing the Cost Estimates). Accessed online at
[ ht t p: / / www.whi t e house.gov/ omb/ ci r c ul ar s/ a076/ a076s2.ht ml ]
19 For a discussion on OMB Circular A-76, see CRS Report RL32017, Office of
Management and Budget Circular A-76: Selected Issues, by L. Elaine Halchin.
status of federal agencies. In 2003, the Bush Administration revised the OMB
Circular to direct federal agencies to evaluate whether more jobs could be considered
Reportedly, as of July 2006 the Army was coded “red” on the PMA. By the end
of FY2009, the Army’s goal is to study 77,873 positions for competition under A-76.
The Army Installation Management Agency (IMA) planned to study 1,574 positions
in FY2006, and 13,500 positions by FY2009.21
The WRAMC competition is seen as an important one to examine. It is a
competition where many things reportedly went wrong, and it occurred in the midst
of a larger controversy. Some have described the events at Walter Reed as “the
perfect storm.” In his testimony before the House Subcommittee, The Honorable
Jack Marsh, former Secretary of the Army and Co-Chair of the Independent Review
Group, described the situation at Walter Reed:
Others have described what occurred at Walter Reed as the “perfect storm”- the
confluence of three forces that compromised the ability of the hospital to deliver
to some patients the standard of care consistent with the traditions of its past.
These forces were: the unexpected casualty load of the Iraq War; the
“contracting out requirements” imposed by the A 76 program, which is
administered by OMB, and dragged on for over five crucial years; and the
decision to close Walter Reed pursuant to BRAC action. An action that was22
ratified by the Congress.
The difficulties at Walter Reed were also acknowledged by President George
W. Bush when he stated “The problems at Walter Reed were caused by bureaucratic
and administrative failures. The system failed you, and it failed our troops. And
we’re going to fix it.”23 This A-76 competition may serve as an object lesson in what
can happen when a federal agency fails to manage numerous conflicting and
competing goals and objectives. Some have also surmised as to whether the culture
of the Army caused and/or contributed to a failure to take appropriate action. Others
have questioned whether the desire to reach the Bush Administration’s competitive
sourcing goals overrode other considerations. In light of these observations, there are
at least three policy questions that Congress may want to consider, in the exercise of
its oversight role over the conduct of future A-76 studies.
!Are the decisions made during the course of the WRAMC
competition likely to shape future public-private competitions?
21 Presentation, Directorate of Information Management, Competitive Sourcing In-Process
Review, July 13, 2006.
22 Opening Statement, The Honorable John O. Marsh, Jr., before the Subcommittee on
Military Personnel, House Armed Services Committee, June 26, 2007.
23 Speech by President George W. Bush. Walter Reed Army Medical Center, Washington
DC, March 30, 2007. [http://www.whitehouse.gov/news/releases/2007/03/20070330-6.html]
!Do problems uncovered during the WRAMC competition reveal
problems inherent in the Circular A-76 policy itself?
!Are there fresh approaches, new options, or alternatives that
Congress may want to consider as it evaluates the efficacy of the A-
In many ways, the WRAMC competition was unique and had characteristics
unlike other A-76 studies. For example, the competition began under the second
term of the Clinton Administration, ended under the second term of the Bush
Administration, took over six years to complete, and was one of the longest DOD A-24
76 studies ever conducted. Three WRAMC base commanders (dual-hatted as
hospital commanders) presided over Walter Reed during the course of the25
competition. The OMB Circular A-76 published before 2003 governed the conduct
of the competition.26 The United States entered combat operations in Iraq in 2003.
24 At least one other competition has taken longer. Two studies were conducted at Keesler
Air Force Base A-76 in Biloxi, MS. The first competition, known as “Big BOS,” began in
1999 and affects about 330 civilian and 400 military employees in base operating support
functions (including civil engineering, supply, supply and mission support). Keesler
announced its tentative decision on August 18, 2005, to award DynCorp a 10-year contract
at a cost of $280 million. When Hurricane Katrina struck on August 29, 2005, the
competition was placed on hold. Since then, the Air Force conducted a damage assessment
and review, the outcome of which was to proceed forward. AFGE is appealing the decision.
A second competition, referred to as “Little BOS,” was conducted for 175 civilian and
military employees in the communications area, and was awarded to the MEO. The private
sector contractor is appealing the award decision. For further information, see the Keesler
AFB Home page, at [http://www.keesler.af.mil]; Press Release, Keesler A-76 Public Review
Begins March 1, Keesler News, February 26, 2007; and Griggs, Susan. “Union, Contractor
File A-76 Appeals.” Keesler News, April 18, 2007; and “A-76 Picks Up Where It Left Off
Before Katrina,” Keesler News, Vol. 67, No. 8, March 1, 2007, p. 1.
25 Some observers have suggested that the nature of the command structure may have made
accountability and management of the process difficult. In the case of Walter Reed,
jurisdiction at the command level for medical functions is under the U.S. Army Medical
Command (MEDCOM), and jurisdiction at the command level for base operations support
functions is under the U.S. Army Installation Management Command (IMCOM).
MEDCOM is commanded by a lieutenant general who is dual-hatted as the Army’s Surgeon
General. The headquarters of MEDCOM is located at Fort Sam Houston, San Antonio,
Texas. MEDCOM includes the North Atlantic Regional Medical Command as well as five
other regional medical commands — Europe, Great Plains, Pacific, Southeast, and Western.
The headquarters of the North Atlantic Regional Medical Command is located at WRAMC.
IMCOM is commanded by a lieutenant general who is dual-hatted as the Army’s Assistant
Chief of Staff for Installation Management. Army Installations Management Command
(IMCOM) is headquartered in Ft. Monroe, Virginia.
26 The new circular established new deadlines for the completion of A-76 studies - 12
months for standard competitions, and 90 days for streamlined competitions. Under this
competition, DOD was limited by law to a 30-month time frame. The new Circular also
required agencies to appoint competitive sourcing officials, such as the Human Resource
After 2003 a significantly higher number of injured troops were treated at WRAMC,
a military base with aging and reportedly substandard facilities.
Another contributing factor may have been the announcement of the base
realignment. During the course of the competition, the 2005 Defense Base
Realignment and Closure (BRAC) Commission voted unanimously to realign Walter
Reed, agreeing with DOD that the facility be combined with the Naval Medical
Center (NNMC) in Bethesda, Maryland. DOD planned to combine personnel and
services of the two hospitals into a new facility called the Walter Reed National
Military Medical Center (WRNMMC), a joint medical center that will provide care
to members of all military services. The effect of this realignment action would be
the closing of what is known as the Walter Reed campus.27
Perhaps another factor was the competition outcome. First, the Army ruled that
the federal employees (known as the Most Efficient Organization, or MEO) had won
the competition in a contest between the MEO and IAP Worldwide Services, a
private sector contractor.28 Then protests were filed with GAO, while appeals were
filed with the Army Audit Agency (AAA). Finally, the Army reversed its earlier
decision and announced that IAP would be awarded the $120 million, five-year
DOD announced the IAP contract award on November 9, 2006.29 According to
press reports, IAP, based in Cape Canaveral, had delivered ice to the Gulf Coast after
Hurricane Katrina30 and helped to maintain Afghanistan’s air traffic control system.
In 2006, reportedly the firm had $393 million in military contracts. IAP had worked
Advisor (HRA), Agency Tender Official (ATO), Performance Work Statement (PWS) Team
Leader; Source Selection Authority (SSA); Contracting Officer (CO), and Competitive
Sourcing Official (CSO).
27 Part of that recommendation is the realignment of WRAMC, which entails the transfer of
many functions from organizations currently located on its Georgia Avenue main post in the
District of Columbia and Forest Glen annex in suburban Maryland to other defense
28 According to the website, IAP’s activities include support for ongoing DOD activities,
disaster relief, base operations and maintenance services, and temporary staffing services
for government agencies. See [http://www.iapws.com].
29 IAP World Services, Cape Canaveral, Fla., was awarded on November 7, 2006, a
$25,800,095 cost-plus-award-fee contract for Base Operations Support at Walter Reed Army
Medical Center. Work will be performed in Washington, D.C., and is expected to be
completed by November 3, 2011. The U.S. Army Medical Command, Fort Sam Houston,
Texas, is the contracting activity (Contract Number W81K04-07-C-0003). (Press Release
No. 1141-06, November 9, 2006)
30 IAP was criticized for their handling of a contract with the Federal Emergency
Management Agency (FEMA) for the purchase of ice during Hurricane Katrina. See Shane,
Scott, and Lipton, Eric. Stumbling Storm-Aid Effort Put Tons of Ice on Trips to Nowhere.
New York Times, October 2, 2005.
at Walter Reed since 2003, providing housekeepers, computer analysts, and clerks
under a Department of the Treasury contract.31
Key Events in the WRAMC A-76 Competition
In June 2000, the Army announced the competition for base operations support
positions, including positions in information technology, clerical support, hospital
services, and maintenance. In September 2000, the Army awarded a contract to
Grant Thornton LLP, a private contractor, to assist the federal employees in32
developing a bid proposal. In August 2001, the Army provided Grant Thornton
with the Performance Work Statement (PWS).33 In March 2003, the United States
entered combat operations in Iraq.
Between May and June 2003, the Army issued requests for bids from private
sector contractors, and selected Johnson Controls World Services as the contractor
to compete against the federal employees. During May 2003, OMB revised the A-76
Circular. Johnson Controls and the federal employees submitted proposals. The
solicitation period closed in September 2003. During October 2003, DOD requested
permission from OMB to use the pre-2003 Circular rules. In November 2003, OMB
gave DOD the authority to extend the competition until September 30, 2004, which
the DOD Competitive Sourcing Official gave as the projected completion date. By
April 2004, the Army Audit Agency (AAA) independently reviewed and certified the
MEO’s bid proposal. In July 2004, the Army revised the solicitation, amended it forth
the 16 time (resulting in about 1,500 changes) and revised the Performance Work
Statement. By September 2004, bid proposals were received from the MEO and the
contractor. On September 29, 2004 the Army announced that the MEO won the
According to media reports, when the Army announced that the government’s
in-house group, the MEO, had won the initial decision in September 2004, the
evaluated government MEO proposed price was $124,479,881. The private sector
31 Vogel, Steve and Merle, Renae. Privatized Walter Reed Workforce Gets Scrutiny.
Washington Post, March 20, 2007, p. A03. According to the article, IAP is owned by
Cerberus Capital Management LP, an asset-management firm chaired by former Treasury
secretary John W. Snow. The company is headed by two former high-ranking executives of
KBR, formerly known as Kellogg Brown & Root. Al Neffgen, IAP’s chief executive, was
chief operating officer for a KBR division before joining IAP in 2004. IAP’s president, Dave
Swindle, is a former KBR vice president.
32 Grant Thornton, LLP is based in Chicago, IL, has about 50 U.S. offices, and provides
management consulting. See [http://www.grantthornton.com].
33 The development of the PWS is critical to the A-76 process. The PWS describes the work
that is to be performed under the competition. It is used to compare the MEO’s cost
estimates with the contractor’s cost estimates, and includes all responsibilities and
requirements; performance standards, acceptable deviations from the standards, and how the
contract will be monitored. The IRO provides an analysis of the PWS for clarity and
completeness. Its analysis will provide the baseline for all cost estimates. See the A-76
Competitive Sourcing Internet Library and Directory, at [http://www.dla.mil/J-3/a-
contractor’s evaluated proposed price was $132,019,150, meaning that the
government MEO won by a difference of $7,539,269.34
The competition was challenged by protests filed with GAO and appeals filed
with the AAA.35 In March 2005, IAP Worldwide Services, Inc. acquired Johnson
Controls and became the company of record. On May 13, 2005, the 2005 BRAC
Commission announced its recommendation to realign Walter Reed.36 During June
2005, the AAA withdrew its certification of the MEO. In June 2005 the Army
notified Congress that IAP will be awarded the contract.37 In August 2005, the AAA
announced they could not reconstruct the basis to certify the MEO’s bid proposal,
and would request approval to cancel the A-76 competition. The Army denied their
In January 2006, the AAA reversed its earlier decision, and declared IAP the
winner. The revised government MEO evaluated proposal price for the competition
was $140,490,286. IAP’s revised evaluated proposal price was $133,028,548. This
result meant that IAP would win the competition by $7,461,737.38 While in the first
award decision, the government MEO’s bid was $7 million less than that of IAP
Worldwide Services, significant changes in the solicitation resulted in a recalculation
of the bids by all parties. As a result, IAP’s bid came in at $7 million lower than the
As a result, IAP was awarded a five-year, costs-plus contract valued at over
$120 million. Immediately, Alan King, acting in what he believed to be his capacity
as the Agency Tender Official (ATO) filed a protest with GAO on behalf of the
MEO. Mr. King asked the American Federation of Government Employees
(AFGE)39 to represent the MEO because it lacked both expertise and money. AFGE
agreed to do so, but was unsuccessful. GAO dismissed Mr. King’s protest.40
34 Little, Bernard S. A-76 appeal denied, cost comparison to be redone. Stripe, March 24,
35 The four bid GAO protests decisions are: (1) Decision No. B-295529, dated January 11,
36 BRAC Commission recommends passage of the plans for the WRANMMC.
37 The Independent Review Panel reported that the bids were later recalculated, and the
private contractor’s bid was more favorable by the same $7 million amount.
38 Little, Bernard S. A-76 appeal denied, cost comparison to be redone. Stripe, March 24,
39 [http://www.afge.org]. AFGE is the largest federal employee union representing 600,000
federal and D.C. government workers nationwide and overseas.
40 ATOs were not allowed under the pre-2003 A-76 rules, but were included under the
revised 2003 Circular. Alan King, the Deputy Garrison Commander, filed a protest acting
in what he argued was his capacity as the Agency Tender Official (ATO). His protest was
denied. See GAO Decision B-295529.6, February 21, 2006.
From June through August 2006, Congress took up legislation to block the
implementation of IAP’s contract award.41 The transition to IAP, originally projected
for November 2006, was predicated by a series of events that were mandated by
law.42 The Army had to give Congress at least 45 days notice of the pending
reduction-in- force (RIF), and give WRAMC employees at least 60 days notice of a
pending RIF. The Army notified Congress and Walter Reed employees that a
reduction-in-force would begin, and authorized IAP to begin work on February 4,
The WRAMC competition had several dimensions which made it both
complicated and complex. What made this competition complicated was the length
of time for the Army to make a decision; the number of appeals and protests filed by
the government and the private sector contractor; and efforts made by Congress to
resolve the issues. What made the competition complex was the convergence of
several factors which came together to create difficult challenges for the Army.
The Role of the Independent Review Group
Following the media reports of the deplorable conditions at some WRAMC
facilities, Secretary of Defense Robert Gates commissioned an independent panel,
known as the Independent Review Group (IRG) to examine both the current
outpatient rehabilitative care and administrative processes at both WRAMC and
NNMC. The panel was established on March 1, 2007, consisted of nine members,
and co-chaired by two former Secretaries of the Army, Togo D. West, Jr. (1993-
1997), and John O. Marsh, Jr. (1981-1989). The panel submitted its report to
Secretary Gates on April 11, 2007.43
Panel Conclusions and Recommendations. The panel concluded that
the BRAC decision to create the new WRNMMC contributed to personnel staffing
problems, a lack of WRAMC management’s attention to day-to-day base operations,
and a lack of resources for capital improvements to base facilities. The Panel found
that the BRAC action created additional pressures for WRAMC management and
complicated management’s ability to manage outpatient services, including factors
41 The FY2007 DOD Appropriations Act (P.L. 109-289) was signed into law without any
language to prohibit funding of the IAP contract.
42 10 U.S.C. 1597(e) states: Involuntary Reductions of Civilian Positions. - The Secretary
of Defense may not implement any involuntary reduction or furlough of civilian positions
in a military department, Defense Agency, or other component of the Department of Defense
until the expiration of the 45-day period beginning on the date on which the Secretary
submits to Congress a report setting forth the reasons why such reductions or furloughs are
required and a description of any change in workload or positions requirements that will
result from such reductions or furloughs.
43 Rebuilding the Trust. Final Report, Independent Review Group Report on Rehabilitative
Care and Administrative Processes at Walter Reed Army Medical Center and National
Naval Medical Center. April 2007.
such as “military to civilian conversions, retention and recruitment of quality staff
members; facilities maintenance and staff attitude.”44 The Panel considered the role
of A-76 in base operations, and concluded that “... the A-76 process created a
destabilizing effect on the ability to hire and retain qualified staff members to operate
garrison functions. The cost savings proved to be counterproductive.”45 Finally, the
Panel recommended that the Secretary of Defense provide the secretaries of the
military services the opportunity to apply for regulatory relief from future A-76
studies, for WRAMC and other military medical treatment facilities only.46
The Army’s Perspective
Decision making over Walter Reed was dispersed over several commands.
While some Army officials wanted to cancel the competition, still others wanted to
complete it. The Army is represented by many different points of view — from
WRAMC management, who fought to represent the employees, and attempted to get
the A-76 competition canceled; Army Medical Command (MEDCOM), which
reportedly denied WRAMC management’s request to increase the numbers of
employees; the AAA, which served as the Independent Review Official (IRO) to
certify the MEO; and Army attorneys who represented the Army before GAO.
In their testimony before the Congress, senior Army officials had different
reactions to the competition.47 They include (1) Lieutenant General Kevin Kiley,
formerly the Army’s Surgeon General, and the former head of MEDCOM and
WRAMC Commander from 2002-2004; reportedly, he was relieved of command
largely due to the publicity surrounding the conditions at Walter Reed; and (2) Major
General George Weightman, the WRAMC Base Commander from August 2006 until
relieved of command in March 2007. In addition, General Weightman headed the
North Atlantic Regional Medical Command.48
Colonel Peter Garibaldi, WRAMC Garrison Commander, was primarily
responsible for managing base operation support activities, including the A-76
competition.49 Efforts by Colonel Garabaldi to solicit MEDCOM’s help in resolving
44 Ibid, p. 37.
45 Ibid, p. 70.
46 Ibid, p. 71.
47 Milbank, Dana. Two Generals Provide a Contrast in Accountability. Washington Post,
March 6, 2007, p. A01.
48 Kennedy, Kelly. Walter Reed Chief Fired: Critics Say More Must Go. Air Force Times,
March 2, 2007. Major General Kenneth Farmer was the WRAMC Base Commander from
49 From CRS Report RL34055: “Each garrison was commanded by an officer assigned to
the position, usually a colonel, who was accountable for maintenance, construction,
servicing, etc., on the site or sites constituting the installation. Funding for the operation of
each post was then no longer funneled through the operational chains of command, but
rather through the IMA and its regions to the individual garrisons. Garrison commanders,
since the creation of the IMA and its transition into IMCOM, have supervised the
the A-76 issues were made public. In September 2006 Colonel Garabaldi wrote a
three-page memorandum, through Major General Weightman, to Colonel Daryl
Spencer, MEDCOM Assistant Chief of Staff for Resource Management, and
requested approval and funding to fix the problems at Walter Reed. In this
memorandum, Colonel Garabaldi stated:
Since the Army initiated the A-76 competition in 2000, the current workload in
the hospital and garrison missions has grown significantly in the past six years
due to our need to care for an support Wounded Warriors from Operating
Enduring Freedom, Operation Iraqi Freedom, and other outcomes of the Global
War on Terrorism (GWOT). As a result, the Army performed the competition
with dated workload data and expectations created before the GWOT began in
2001. Now in 2006, we need more personnel than the competition had
anticipated.... As a direct result of the A-76 competition, its associated proposed
RIF (reduction-in-force), and eventual Base Realignment and Closure (BRAC)
of WRAMC’s Main Post, we face the critical issues of retaining skilled clinical
personnel for the hospital and diverse professionals for the Garrison, while
confronted with increased difficulties in hiring.... Due to the uncertainty
associated with this issue, WRAMC continues to lose other highly qualified
WRAMC established its garrison command in 2002 when the Army established
the Installation Management Agency (IMA). Consequently the A-76 competition
data in 2000 did not include other areas of the garrison command necessary to
run a full service BASOPS (base operations support) organization. These
include the Directorate Of Logistics (DOL) and Plans Analysis and Integration
Office (PAIO); therefore, the final contractor submission did not include
positions for them. Furthermore, MEDCOM did not approve any full-time
equivalents for the Garrison DOL or PAIO functions anywhere in the Continuing
Garrison Organization (CGO). Without favorable consideration of these
requests, WRAMC Base Operations and patient care services are at risk of50
Colonel Garabaldi’s memorandum illustrated the challenges he faced in trying
to manage the day-to-day operations at Walter Reed, while at the same time
managing both the numerous responsibilities created by the BRAC decision and the
surge in outpatient medical care treatments.
installation of contract guard forces at posts on United States territory, military construction
and building demolition, provision of supplies and services, privatization of installation
utilities and military housing, and the creation of public-private partnerships, such as the two
enhanced use lease projects at the Walter Reed installation.” Else, Daniel and O’Bryant,
Joanne. Walter Reed Army Medical Center: BRAC 2005 and Options for Congress, p. 14.
50 Subject: Challenges Concerning the Base Operations A-76 Competition and Resulting
Reduction In Force (RIF) at Walter Reed Army Medical Center (WRAMC). Memorandum
thru MG George W. Weightman, Commander, NARMC and WRAMC, for Colonel Daryl
Spencer, Assistant Chief of Staff for Resource Management, MEDCOM, by Peter M.
Garibaldi, Colonel, MS, Garrison Commander. The memorandum can be accessed from the
House Committee on Oversight and Government Reform website, at
Competition Took over Six Years
This competition took longer than most A-76 studies. The competition was
announced during the second term of the Clinton Administration, and was concluded
in the second term of the Bush Administration. While OMB reported that the
average time frame for a standard public-private competition under Circular A-76
completed in FY2006 was just over 13 months, the WRAMC competition took over
six years to complete.51 Senator Barbara A. Mikulski along with several of her
Senate and House colleagues wrote a letter to then-Secretary of the Army Francis
Harvey, requesting that the contract be cancelled, and arguing that the length of the
competition violated DOD policy and public law.
The undersigned lawmakers urge you not to enter into a contract for base
operations support services at the Walter Reed Army Medical Center
(WRAMC). A September 29, 2004, decision in favor of the in-house workforce
was subsequently reversed earlier this year, resulting in a tentative decision to
contract out the jobs of 350 federal employees in favor of a $120 million
contract. The highly unusual circumstances surrounding this particular OMB
Circular A-76 privatization review, particularly the apparent violation of the
Anti-Deficiency Act, demand sustained Congressional scrutiny and if necessary
decisive Congressional intervention.
The WRAMC OMB Circular A-76 privatization review was started on June 13,
received a waiver, special permission, from the Office of Management and
Budget (OMB) to continue the WRAMC A-76 review under the rules of the
Circular prior to its revision on May 29, 2003. However, OMB set certain
conditions on how the WRAMC A-76 was to be conducted. OMB “expect(ed)
DoD to make final decisions for these cost comparisons (including the WRAMC
privatization review) no later than September 30, 2004, the completion date
projected by the DoD Competitive Sourcing Official in his October 24, 2003,
letter to OMB.... The DoD Competitive Sourcing Official is responsible for
ensuring use of the previous Circular is limited to timely completion or
cancellation of any initiative....” However, the Army continued the WRAMC A-
DoD could not unilaterally change the terms of the waiver from OMB. While it
could have asked OMB for an extension, it appears that DoD never submitted
such a request. The WRAMC privatization review should have been cancelled
when the deadline in the waiver had expired but the Army had failed to complete
the WRAMC privatization review in a “timely” fashion.
The excessive length of the WRAMC privatization review appears to be in
violation of both DoD’s own rules, which limit A-76 privatization reviews for
multi-function activities to 48 months, and, more importantly, the Defense
Appropriations Bill, which limits A-76 studies for multi-function activities to 30
months. As you might imagine, the Congress takes very seriously any violations
of the Anti-Deficiency Act. The apparent failures of the Army to abide by the
terms of the OMB waiver, its own rules, and the law, in conducting the WRAMC
51 OMB Competitive Sourcing update, May 2007. OMB reported that the FY2006 results
were significantly better than results achieved under the pre-2003 Circular, where
competitions took from two to three years to complete.
privatization review long past the established deadlines, are not mere
technicalities. Deadlines for the completion of A-76 privatization reviews are
established for a very good reason: such exercises generate significant costs and
can undermine productivity. The longer A-76 privatization reviews continue, the
higher their costs; and the higher their costs, the less likely that those A-76
privatization reviews will generate any actual savings.
We appreciate that the Army understands very well the highly unusual
circumstances surrounding the WRAMC A-76 privatization review as well as the
strong arguments for its cancellation. After all, after the sixteenth solicitation to
the solicitation was issued, one which included more than 1,500 changes, many
of them involving significant increases in workload, the in-house bid was
decertified. That’s why the Army’s Assistant Secretary for Installations and
Environment reported in an August 8, 2005, letter to the contractor that the
“Army will request approval to cancel the (WRAMC privatization) study.” Given
its troubled history, that was clearly the correct course of action.
Again, the undersigned lawmakers urge you not to enter into a contract for base52
operations support services at WRAMC.
Senator Mikulski’s letter asserts that at least three apparent violations occurred
because of the excessive length of time of the competition: apparent violations of (1)
DOD’s own rules which limit A-76 competitions for multi-function activities to 48
months53, (2) the DOD Appropriations Act which limits A-76 competitions for54
multi-function activities to 30 months, and (3) the Antideficiency Act.
Observations About the Length of the Competition. The six-year delay
was, in part, due to a number of factors, including congressional intervention to seek
a legislative compromise to either prohibit the appropriation of funds for the
competition - either to reverse the decision to award the contract to the private sector,
or to stop the implementation of the BRAC decision. Other observers of the
competition point to the Army’s decision to continue the competition even though
the agreed-upon time limits were not kept. Still others point to the fact that the Army
added over 1,500 amendments (or changes) were made to the solicitation —
amendments which were later added, according to GAO, to accommodate the surge
52 Mikulski Stands up for Federal Employees at Walter Reed Army Medical Center. Letter
to Secretary of the Army Francis Harvey, March 16, 2006. Accessed online at
53 Each year, Defense Appropriation bills have contained language which prohibits the use
of funds to conduct studies outside of a specific time limit. From FY2000-FY2003, DOD
appropriation bills prohibited the conduct of A-76 competitions beyond 48 months. In
October 2003, Section 8022 of the FY2004 Defense Appropriations Act (P.L. 108-87)
prohibited the conduct of A-76 competitions beyond 30 months. OMB gave DOD a waiver
to complete the Walter Reed competition by 9/30/04 (this is the completion date projected
by the DOD Competitive Sourcing Official). Section 8022 of the FY2005 Defense
Appropriations Act (P.L. 108-287) included a 30-month limitation for the conduct of multi-
function A-76 competitions. However, the Walter Reed A-76 competition continued in
apparent violation of public law and the Antideficiency Act.
54 Title 31, United States Code (31 U.S.C. 31 U.S.C. § 1341(a)(1)(B). The Antideficiency
Act prohibits government spending in excess of available funds.
in maintenance and upkeep activities needed at WRAMC after the start of combat
operations — as the reason why the competition took longer than expected.
Attrition of Skilled Base Operating Support Staff. The most immediate
impact of an announcement of a pending A-76 competition is often that skilled
personnel are the first to quit, while new employees are usually sought to replace
those leaving. However, some potential new employees have been reluctant to accept
jobs that are in the midst of transition. Even employees who may be part of the
proposed MEO may start to look for other jobs. Public-private competitions that take
an inordinate amount of time to complete may also raise the anxiety level among
existing employees, and create uncertainty. Such uncertainty can adversely affect
recruitment. In a September 2006 memo, Colonel Garabaldi admitted that he had
difficulty in retaining and hiring skilled personnel.
To complicate matters, not only was the competition underway, but the BRAC
action would eventually close the main campus. When a military facility is facing
a BRAC action, large financial commitments are usually withheld for infrastructure
improvements. Such was the case at Walter Reed. Major General George W.
Weightman, WRAMC’s Commander, testified before Congress that the privatization
of base support services, in combination with the decision by the Pentagon to close
WRAMC, contributed to the problems at the base. At the same hearing, Navy
Surgeon General Vice Admiral Donald Arthur also testified as to his experience with
A-76 competitions. While he was not involved in the Walter Reed competition, his
comments reveal that the exodus of staff is not confined to the Army. He stated:
We have not had similar incidents of A-76 studies on as grand a scale as Walter
Reed has. But I would tell you in general, whenever you promulgate an A-76
competition, the very best people that we have start looking for other jobs and
we end up with a dearth of people in the billets that are currently filled. And very
often I think it comes out that a government worker — someone on the general
schedule or one of our contractors — is at least as cost-effective as a55
privatization would be.”
Generals Kiley and Weightman stated that the combination of factors helped
to destabilize the WRAMC workforce. In their testimony before Congress, they
spoke of the effect of the competition’s length on employee morale. The longer the
competition took, the more difficult it was to manage. Here is an excerpt from a
March 6, 2007 hearing where General Weightman responded to questions posed by
Delegate Eleanor Holmes Norton.
Delegate Norton: Could I ask you whether you believe that it would have been
better not to privatize the entire garrison workforce when the facility was already
undergoing pressures from BRAC and faced with those uncertainties — when
you surely would have known that it would scattered that workforce, that
experienced workforce, and that your own workers had won the competition for,
in fact, keeping this facility up, including Building 18. Would it not have been
better, in light of all the uncertainty, simply to go with the workforce you had?
55 U.S. Congress. Health and the Military. Hearing of the Defense Subcommittee of the
Senate Appropriations Committee, March 7, 2007.
Why did you seek to privatize the workforce in light of the BRAC uncertainty
and add to that with the uncertainty that always attends privatization?
General Kiley: First, ma’am, I would like to say that the request — Colonel
Garibaldi through General Weightman — I approved those at MEDCOM and we
resourced those requirements from him. He was unable to execute them, which
was the issue. I gave him the money he needed, but you’ve already articulated the
General Kiley: You’ve identified the issue: When you’re not going to have a job
much longer, why should you hire one?
Delegate Norton: Therefore, why should you privatize it? It started on your
watch, General Kiley.
General Kiley: Actually, it started, as I understand it, in 2000, when it was
identified as one of the privatization efforts under A-76. And once that
installation was identified to the Army as a process....
Delegate Norton: Just let me — I’d trying to get an answer because I know they
want to move on. Would it have been the better side of wisdom not to privatize
everything here except the clinical and medical workforce, and therefore add to
the stability or the instability that inevitably comes with BRAC?
General Kiley: It did increase the instability.
NORTON: Thank you, sir.
General Weightman: Absolutely. Between BRAC and A-76 it was two huge
impacts on our civilian workforce, which is two-thirds of our workforce here at
NORTON: Thank you, Mr. Chairman.56
Cost Comparison Between the Government MEO and
Here is a summary of the evaluated costs for both the government MEO and IAP57
Worldwide Service in the WRAMC competition.
56 Hearing before the House Committee on Oversight and Government Reform,
Subcommittee on National Security and Foreign Affairs, March 5, 2007.
57 Source: A-76 Town Hall Meeting, information presented by John W. Wettereau, Chief,
A-76 Operations Center, March 2, 2006 (provided by officials from the American
Federation of Government Employees).
CompetitorSeptember 2004January 2006
IAP $132,019,150 $133,028,548
Difference $7,539,269 ($7,461,737)
It should be noted that according to this data the costs for the MEO were
significantly increased from September 2004 to January 2006, while the cost for the
contractor did not significantly increase. Later the Army responded to then-Senator
Sarbanes’s request for cost information on the WRAMC competition. The following
excerpts are from a memorandum reportedly written by Mr. William A. Armbruster,
Deputy Assistant Secretary of the Army for Privatization and Partnerships.
On May 11th, I provided an interim reply to your April 27, 2006 letter requesting
cost information regarding the Walter Reed Army Medical Center base
operations support services competition under OMB Circular A-76. The U.S.
Army Medical Command (MEDCOM) has carried the greatest cost of all the
associated organizations in bringing this unprecendented competition to a
conclusion. The numerous protests and contests that caused a two-year delay in
reaching the decision state have greatly increased the cost of this competition.
The MEDCOM costs, as well as other involved organizations, are listed below:
Personnel ( $3,569,374)
Supplies ( 34,565)
Contracts ( 2,965,164)
Army Audit Agency208,056
Army Contracting Agency2,071
HDQA, including Legal/Litigation41,709
Total Compensation Costs$7,068,049
The transition costs below are an estimate based on employee interviews during
which 109 employees indicated they were “interested” in accepting the
Voluntary Early Retirement Authority (VERA) or the Voluntary Separation
Incentive Pay (VSIP). If any of these employees decide to accept a new,
permanent job offer in lieu of returning or separating, these costs, and separation
pay costs, would be reduced.
V ERA/V SIP ( $3,741,186)
Admi nistration ( 600,000)
MEDCOM Administration (837,958)
The annual savings over the baseline costs will be about $4.5 million. The
contractor’s cost proposal for the five-year term was almost $17.5 million less
than the government workforce’s cost proposal. Even with the extraordinary58
expenses of this competition, the resultant savings are significant.
One observer of the A-76 process, John Threlkeld, an AFGE lobbyist, wrote in
an analysis of the WRAMC competition that the Army’s cost estimate is
“demonstrably flawed.” Mr. Threlkeld stated that the Army’s analysis fails to take
into account the $10 million “minimum cost differential” that federal rules require
must be applied to contractor bids to account for costs associated with disruption and59
loss of productivity related to the competition process.
Threlkeld has stated that because the congressional waiver of the 30-month limit
expired at the end of FY2004, in FY2005 and FY2006 the Army was in violation of
the Anti-Deficiency Act - that when the A-76 competition extended beyond the
deadline, DOD was spending money in excess of the amount of money in the
appropriation, which is a violation of the Antideficiency Act. He also noted that at
one point during the 16-month period between the initial decision in favor of the
MEO and its subsequent reversal in favor of an award to IAP, the Army asked DOD
if it could cancel the competition and DOD instructed the Army to finish the
Implications for Future Competitive Sourcing
What are some of the broader implications of the WRAMC competition on the
future of competitive sourcing studies under OMB Circular A-76? Are the decisions
made during the course of the WRAMC competition likely to shape future public-
private competitions? Possibly due to the Walter Reed controversy, the Army has
announced its plan to cancel all future outsourcing contracts at military medical
facilities for 2007 and 2008. According to the Army Medical Command’s Chief of
Staff, William Thresher, “In light of the increased requirement for health care assets
to support the global war on terrorism, Headquarters Department of the Army has60
accorded us a reprieve from participating in future A-76 efforts.” Future
competitions were planned for various Army facilities, including Fort Detrick
(Maryland) and WRAMC, and the range of activities would have included base
operations support, pharmacy, radiology, pathology and ambulance services.
Is it fair to draw firm conclusions about the entire A-76 process based on the
Walter Reed competition? Do problems uncovered during the WRAMC competition
58 Memorandum to the Honorable Paul S. Sarbanes from William A. Armbruster, Deputy
Assistant Secretary of the Army, Privatization & Partnerships. June 7, 2007. Also, see
Mandel, Jenny. “House votes to block Walter Reed outsourcing; Army moves forward.”
Government Executive, June 23, 2006.
59 Mandel, Jenny. “House votes to block Walter Reed outsourcing; Army moves forward.”
Government Executive, June 23, 2006.
60 Castelli, Elise. “Army cancels job competitions at medical facilities.” Army Times
Publishing Company, April 23, 2007, pg. 5.
reveal problems inherent in the Circular A-76 policy itself? Is A-76 inherently
flawed, or is the Walter Reed situation an anomaly? While it may be unfair to
generalize about all A-76 studies based on Walter Reed, it appears that the Walter
Reed competition was poorly executed. Such are the observations of former
Secretary of the Army Togo West. Mr. West served as the Co-chairman of the
Independent Review Group and former Secretary of the Army, Army lawyer, and
Secretary of the Department of Veterans Affairs. In May 2007, he spoke of the
group’s study of the Walter Reed controversy.
JIM LEHRER: What went wrong over there at Walter Reed, Mr. Secretary? How
were things allowed to happen that did happen?
TOGO WEST: One of the things is that deficiencies in maintenance had been
accumulating over time at Walter Reed. Now, when a system, a medical center,
is doing as well as that distinguished facility was in peacetime, and without the
stress of a war-time engagement, you can miss some of that. But once you get
the numbers that were forced into Walter Reed — Jack Marsh mentioned 640;
at the height, there were some 800 in the medical hold among outpatients — then
the cracks begin to show, the difficulties begin to come clear. For example, if
you go to that number of outpatients in the whole facility, and the case worker
staff stays at the same or even drops, well, then, cases are going to be unattended
to, in terms of getting servicemembers to appointments and the like.
JIM LEHRER: And why was the number of caseworkers not increased?
TOGO WEST: Walter Reed had been placed on the black list. It had been
JIM LEHRER: What is that?
TOGO WEST: The A-76 procedure is a procedure by which a facility evaluates
whether it should take governmental assignments and convert them into private
contractor assignments. It almost freezes any hiring until that process is
completed. It was a long process. Once it was done, Walter Reed was down by
as much as 37 percent among its most important caseworker, nursing, and the
JIM LEHRER: In other words, the number of people available to do the work
was going down while the number of patients was increasing, both of them
TOGO WEST: That’s right. That’s exactly right.61
Certain conclusions may be drawn from this competition. First, six years in the
life of an A-76 competition is a long time, and the competition is not conducted in
a vacuum. A lot can happen to change the course of events. Given the complexity
of issues and the convergence of events, the decision to continue with the Walter
Reed competition may have been unwise. The events show how difficult it is to
61 Holman, Kwame and Lehrer, Jim. Pentagon Forms Committee to Oversee Walter Reed
Repairs. Transcript, The Online News Hour.
conduct competitions when there are numerous competing interests and priorities.
Neither BRAC nor the effect of combat operations were anticipated when the
decision was made to conduct the Walter Reed A-76 competition. Either or both
events could have been used as rationales for delaying or even cancelling the A-76
Second, federal agencies may be under increasing pressure to meet the
numerical quotas of the Bush Administration’s Presidential Management Agenda
(PMA). According to the Army, the Department was reportedly required to review
approximately 77,873 positions for competitive sourcing by the end of FY2009.62
How much of the decision not to cancel the competition was driven by the Army’s
desire to meet the PMA goals is unknown. One of the challenges facing federal
agencies is how to conduct competitions when there are constrained resources.
Given the constrained resources presented by combat operations and BRAC actions,
the Army might have made the decision to cancel the competition but still fallen
short of the numerical quotas.
Third, it appears that if the A-76 policy is going to work effectively, it cannot
be the used for every federal activity. Some have suggested that the Army’s
constrained resources was the reason why repairs were not made to the reportedly
substandard facilities at WRAMC.63 Perhaps for some activities A-76 competitions
are not appropriate, particularly for activities that affect military health care
(including base operations support, maintenance, and repair). Some would argue that
trash removal is not an inherently governmental activity; but for a medical setting,
regular maintenance and repair of health care facilities may be critical to the morale
of the patient. A case could be made that any activity that touches the military patient
should be considered inherently governmental, including, for example, trash removal
on a military health care facility.64 When the mission (like patient care) is critical,
the risks of mission failure are high. In this view, base operations support activities
should be exempt from competition.
Options for Congress
While Congress is not compelled to pursue any action at all, there may be
legislative initiatives that Congress may want to pursue in the area of A-76
competitive sourcing policy. Are there fresh approaches or alternatives that Congress
may want to consider as it evaluates the efficacy of the A-76 policy? Among them,
Congress could require more specific reporting on the status of ongoing A-76
competitions; prohibit numerical quotas and the conduct of competitions for
62 Competitive Sourcing In-Process Review for the Department of the Army. Directorate
of Information Management, July 13, 2006. This data is based on a report provided by the
American Federal of Government Employees (AFGE).
63 Lupold, Gordon. “How Decay Overtook Walter Reed.” Christian Science Monitor,
March 7, 2007.
64 Inherently governmental activities are functions that are considered so integral to the
agency’s mission that the activity can only be performed by federal employees.
activities at military medical facilities; prohibit competitions at military medical
facilities; prohibit the inclusion of health care and retirement costs in competitions;
change the rules, enforce the law, provide parity for contractors and federal
employees, and consider alternatives like the development of “high-performing
organizations.” Finally, if there are still outstanding competitions under the pre-2003
Circular, Congress could cancel them.
Require Specific Reporting on the Status of Ongoing
Congress may direct DOD to provide more detailed information on the status
of ongoing A-76 studies. Congress may want to receive a quarterly update on the
status of DOD competitions, to include the following information:
!the number of older competitions under review, and whether these
competitions have been granted waivers;
!the status of new standard multi-function A-76 studies, including
how many competitions are in excess of the 12-months limitation,
and how many have been granted waivers;
!the number of competitions that are in excess of 18 months, with or
!the number of competitions in excess of 30-months, with or without
!the demographics of the affected government employees in A-76
competitions, and whether any particular group of employees are
adversely impacted by the A-76 policy, competition process or the
Prohibit the Establishment of Numerical Quotas for
Congress could prohibit the establishment of numerical quotas for federal
agencies. Some have argued that the desire to meet numerical quotas (or targets) may
have been a factor in the Army’s decision to continue the competition despite the
problems evolving during the competition.65
Declare All Activities at Military Medical Facilities to Be
Congress could declare that any activities on military medical facilities that
affect patient care would be considered inherently governmental and not appropriate
for competition. One way to accomplish this would be to declare all activities at
65 See proposed Section 323 of H.R. 4986.
military medical facilities as “inherently governmental” and not subject to
competition. The case can be made that the activities at military medical facilities
at WRAMC are too critical to national security that they require performance by
As an example, one possible option Congress may want to consider is to declare
a one-year moratorium on the conduct of future A-76 competitions at military
medical facilities. This legislative initiative was proposed by Representative
Solomon Ortiz in the House-passed version of H.R. 1538, the Wounded Warrior
Assistance Act of 2007. Here Representative Ortiz describes the intent of the bill.
The amendment as adopted today would impose a one-year moratorium on all
future A — 76 competitions at the Department of Defense for work performed
at medical facilities. Both the private and public sectors have identified flaws in
the program. And the problems we discovered at Walter Reed Army Medical
Center are only the tip of the iceberg. In a September 2006 memo, the garrison
commander admitted that he had difficulties in retaining and hiring skilled
personnel. This was because of the A — 76 competition, the proposed RIFS that
went with it and BRAC. That is why we need to step back and review whether
A — 76 competitions are the right way to find cost savings and efficiencies for
military medical facilities. And we need to make sure that we have not sacrificed
service or performance of the mission. Let me make clear. This amendment
addresses only future contracts for services performed at medical facilities. It
does not overturn the Walter Reed contract. It would be irresponsible to do that.
The federal workforce has gone to other federal jobs or hired by the private
contractor, who is now on the job and performing.
The amendment as approved also calls for a report that will help us determine the66
value of the A — 76 process.
Prohibit the Inclusion of Health Care and Retirement Costs
from the A-76 Cost Comparison Process
Congress could prohibit the inclusion of health care and retirement costs in the
cost comparison process. Reportedly, the Army failed to comply with the
requirement in the Defense Appropriations bill to exclude health care costs from the
A-76 cost comparison process if DOD contributed more (per employee for health
care insurance) than the contractor contributed (per employee for health care
insurance). The exclusion of retirement costs might preclude the rewarding of
contractors for providing benefits that are less than those provided by the federal
66 H.Rept. 110-68, Part 1, p. 39, which accompanies the Wounded Warrior Assistance Act
67 See proposed Section 322 under H.R. 4986.
Establish a Team of Acquisition Professionals to Rotate
Service as Agency Tender Officials
It would appear that based on the Walter Reed Competition no one individual
has overall authority for the conduct of the competition. What happens when a
competition becomes complex or complicated, as in the situation at Walter Reed?
While the Army (represented by many different officials) and the Office of the
Secretary of Defense have shared authorities and responsibilities for A-76, these
officials share what may appear to be somewhat conflicting and confusing roles —
to both advocate for the integrity of the A-76 process while at the same time
exercising their institutional roles. The Deputy Garrison Commander, as an example,
attempted to appeal the outcome of the competition. He lacked the legal standing to
do so, and he also lacked the authority and financial resources to pursue the matter.
One option could be for OMB to establish a team of experienced A-76
professionals who could be called upon to serve as ATOs. These professionals could
be selected to serve as ATOs in competitions outside of their assigned federal agency.
Also, ATOs would require sufficient funds to represent the federal employees
throughout the entire course of the A-76 competition, and may also require a certain
Require an Enforcement of the A-76 Rules
Congress could ensure that the A-76 rules are followed. When the rules
governing the conduct of A-76 studies are not followed, there is no authority to
ensure that the rules are followed, and the process as well as the final decision may
lack integrity. There appears to be no authority to ensure that the rules are followed;
as a result, many parties lose confidence in the A-76 process. Some have suggested
that OMB could have stopped the Walter Reed A-76 competition when it exceeded
the permitted length of time. Others have pointed out that DoD could have stopped
the A-76 competition when it exceeded the length of time as prescribed by law in the
Defense Appropriations Act. Also, some have pointed out that the Army could have
excluded health care costs from the contracting out cost comparison process, as
required by the Defense Appropriations Act. An enforcement of the rules of the
Walter Reed A-76 competition may have resulted in a different outcome.
Grant Federal Employees the Same Rights as
Private Sector Contractors
The right to protest is an essential element of the outcome of the Walter Reed
competition. The right to file a protest is provided in the Competition in Contracting
Act.68 It should be noted that at the time of the Walter Reed competition, the
Competition in Contracting Act provided private sector contractors the right to file
protests with GAO, while federal employees were prohibited from exercising any
68 The Competition in Contracting Act of 1984, Public Law 98-369.
protest rights.69 However, P.L. 108-375 expanded the definition of who is an
“interested party” and included the Agency Tender Official (ATO).70 Federal
employees also wanted to protest directly, but were prohibited from doing so. The
ATO, the federal employee representative, tried to file a protest but GAO determined
that no ATO existed (in the pre-2003 Circular) and so the ATO lacked standing. This
sequence of events suggests that A-76 has not always afforded both equity and
The issue of a lack of the right of federal employees to directly protest the
outcome of the competition is central to the outcome of this competition. GAO heard
the protest filed by IAP, the contractor; which IAP had the statutory right to file.
Without this protest, the MEO would presumably have won the competition. On the
face of it, the inability to directly protest their case put the affected federal employees
at a disadvantage.
The Walter Reed competition showed that WRAMC management wanted to
advocate on behalf of its employees, but was prohibited from doing so. More
importantly, WRAMC management reported that they were unable to advocate on
behalf of the federal employees because (1) they did not have the in-house expertise
to handle the appeal process, and (2) they did not have the money to pay for outside
legal counsel. They took the extraordinary step of contacting AFGE to handle the
federal employee appeal.
Congress could grant legislative authority for federal employees themselves to
have direct protest rights. While the ATO has the right to protest on behalf of federal
employees, it is at the discretion of the ATO. If an ATO decides not to protest on
behalf of federal employees, there is no recourse. Also, Congress could prohibit
federal agencies from conducting competitions unless they have enough money to
fund competitions entirely, including representation for the federal employees during
all phases of the competition, up to and including the post-award process.71
Encourage Alternatives to A-76
Congress could also provide encouragement and incentives to federal agencies
that seek to explore appropriate alternatives, like creating high-performing
organizations (HPO), to gain the same (or better) efficiencies that are sought through
A-76 competitions. GAO’s Commercial Activities Panel (CAP) recommended the
69 Section 326 of H.R. 4200, the Ronald W. Reagan NDAA for Fiscal Year 2005 (P.L. 108-
375), amended the Competition in Contracting Act by providing that federal government
officials, known as agency tender officials (ATOs), may file protests with GAO in
connection with A-76 competitions. ATOs may file protests on their own initiative, or at
the request of a majority of employees involved in the competition.
70 Under the new Circular, the ATO has the authority to file a protest on behalf of federal
employees. The Alan D. King protest decision changed the law. The reason that Alan King
could not protest to GAO was because the new provision had an effective date, and it was
not that date yet. See GAO Decision B-295529.6, February 21, 2006.
71 See proposed Section 326 of H.R. 4986.
creation of HPOs.72 Given that federal employees are now winning the majority of
competitions, agencies like the Army might look to alternatives that don’t have the
costs and other challenges associated with A-76.
Cancel A-76 Studies Under the Pre-2003 Circular
To avoid problems similar to those that resulted at Walter Reed, Congress could
direct the cancellation of any outstanding competitions conducted under the pre-2003
Circular. The American Federation of Government Employees has recommended
that the A-76 study at Keesler AFB be cancelled. According to one media report,
AFGE describes a competition at Kessler Air Force Base that has taken at least eight
years to complete.73
72 GAO Report 04-543SP. High Performing Organizations: Metrics, Means and
Mechanisms for Achieving High Performance in the 21st Century Public Management
Environment. Highlights of a GAO Forum, February 2004. CAP recommended that federal
agencies be developed into high-performing organizations, known as an HPO.
73 AFGE Seeks Cancellation of A-76 Plans at Keesler AFB. Federal Daily, May 2, 2007.
Excerpts from the Executive Summary, Chapter. Rebuilding the Trust. Final
Report, Independent Review Group Report on Rehabilitative Care and
Administrative Processes at Walter Reed Army Medical Center and National Naval
Medical Center. April 2007, pp. 37-42.
IV. LEADERSHIP, POLICY, AND OVERSIGHT
Command and Control
The leadership at Walter Reed Army Medical Center did not maintain an
acceptable standard of managing outpatient services for injured and sick service
members. Walter Reed’s inclusion on the Base Realignment and Closure list and
pressure to outsource traditional military service functions through A-76
implementation, complicated leadership’s ability to appropriately manage outpatient
services. Additional factors include military to civilian conversions; retention and
recruitment of quality staff members; facilities maintenance; and staff attitude, also
impacted the efficacy of leadership’s role at Walter Reed.
Base Realignment and Closure (BRAC)
In August 2005, the Base Realignment and Closure Committee recommended
Walter Reed Army Medical Center installation, including the Armed Forces Institute
of Pathology, be closed. The Committee also recommended that the Walter Reed
Army Medical Center be realigned with the National Naval Medical Center to create
the Walter Reed National Military Medical Center (WRNMMC). The
recommendation was approved by Congress in November 2005, and plans call for
the full integration to take place by September 2011.
This timeline effectively places Walter Reed Army Medical Center in a state of
“limbo” regarding its ability to make capital improvements and recruit and retain
qualified staff. The complexity surrounding the creation of Walter Reed National
Military Medical Center requires significant attention from the current leadership,
resulting in time and resources being taken away from the effective management of
the hospital. There is no doubt that the facilities at Walter Reed require replacement
and the present campus is too small to accommodate the large patient load and influx
of family members resulting from Operations Iraqi Freedom and Enduring Freedom.
There are economies to be gained through the creation of Walter Reed National
Military Medical Center. The timing of the Base Realignment and Closure decision
and implementation of its timeline could not have been worse; a time when the
mission to treat war wounded, sick, and injured service members, while maintaining
normal patient load, was at its highest demand at Walter Reed. The establishment
of the Walter Reed National Military Medical Center, on the campus of Bethesda,
along with the co-location with the Uniformed Services University of the Health
Sciences and close proximity to the National Institutes of Health, makes an ideal
setting for the continued cooperation between the civilian sector and the Armed
Forces Institute of Pathology. The Armed Forces Institute of Pathology is integral to
the military and civilian medical research communities of today as well as to the
future of our healthcare system.
The Base Realignment and Closure decision to create the new Walter Reed
National Military Medical Center contributed to staffing problems, inattention of
leadership to day-to-day operations, and a lack of resources for capital improvements.
The inclusion of Walter Reed Army Medical Center on the Base Realignment
and Closure list forced leadership to devote a substantial amount of time to the
planning for integration of clinical services with the National Naval Medical Center.
At least one senior staff member indicates he spends over 30% of his time devoted
to Base Realignment and Closure issues; time that could be spent seeing to the needs
of patients and their families. The leadership complexities of Walter Reed Army
Medical Center Command are challenging and very broad in scope and span of
control. From the operation of a major military academic medical center, providing
a full range of casualty care to managing the healthcare market for beneficiaries in
the National Capital Region, the commander is also responsible for health care
oversight for the northeastern United States. The addition of the responsibilities
associated with Base Realignment and Closure demanded long term strategic focus
and planning and competed with other operational requirements of day-today
leadership. Recruitment and retention of critical specialists have also been affected
by the Base Realignment and Closure decision. According to the Deputy Commander
of Clinical Services, “since the announcement of the Base Realignment and Closure
decision, Walter Reed Army Medical Center has lost six long-term highly trained
anesthesiologists, a key clinical information programmer, a senior claims attorney,
patient safety officer and a candidate to run the credentials office to name a few.”
Due to the perceived instability surrounding the continued operation of Walter Reed
Army Medical Center, the Accreditation Council for Graduate Medical Education
recently reduced the accreditation of many Walter Reed Army Medical Center’s
programs from five years to two years of accreditation, making these residency
programs less desirable. The long-term effects of the accreditation change have yet
to be realized.
The Assistant Secretary of the Army (Installations & Environment) made a
decision to discourage capital expenditures for facility improvement projects on
Army installations scheduled for closure as a result of the Base Realignment and
Closure recommendations. Noted in a Department of Army memo, “At installations
recommended for closure, all facility projects, regardless of fund source, not under
contract or, if in-house, not started, shall be deferred pending the final Base
Realignment and Closure decision. Any exception based on legal, health, or
environmental requirements shall be addressed on a case-by-case basis to Assistant
Secretary of the Army (Installations & Environment) for decision.”
This created a decline in facility improvements, and impeded leadership’s
efforts to convince legislators of its need for critical facility improvements, such as
the Warrior Rehabilitation Training Center (Amputee Center), currently under
construction. The replacement of the aging hospital facility at Walter Reed as well
as others within the National Capital Region was the target for Base Realignment and
Closure and acceleration of the processes for both the new Walter Reed and Fort
Belvoir will move all patients in the region to include the combat injured into modern
facilities faster. Current proposals for the acceleration of the new Walter Reed
National Military Medical Center move the construction completion date ahead eight
months to October 2010. Creation of the new Warrior Care Center at the Bethesda
campus could be completed by October 2009, allowing use of this resource as early
as possible. Similar acceleration strategies should also be considered with the new
hospital construction at Fort Belvoir with completion by August 2010. During a time
of war, focusing on serving the needs of soldiers and families by providing them the
best possible facilities for care and recovery is imperative.
The Secretary of Defense should seek legislative approval to accelerate the
implementation of the Base Realignment and Closure Commission’s
recommendations. Specifically, accelerate or waive the Environmental Impact
Competition (EIS) and release monies required to start construction of the “new”
Walter Reed National Military Medical Center.
The existing facilities should not be allowed to “die on the vine.” Expeditious
integration of these two facilities will lessen the time Walter Reed Army Medical
Center is in a state of “limbo,” and can take advantage of economies at a quicker pace
while ultimately improving the treatment of eligible servicemembers and their
families. The servicemembers and their families should not experience any delays in
service during this transition. Funding must be provided to maintain full operation
until the day of closure.
The Office of Management and Budget A-76 circular provides for public/private
competition for tasks that are not considered inherently governmental. The A-76
program was designed for the government to select the “most efficient organization”
to perform those tasks that are not considered inherently governmental tasks. The
announcement to implement the provisions of the A-76 at Walter Reed Army
Medical Center took place in 2000, almost seven years prior to the last contract
award to a private firm. During that time, the government bid on the contract to
provide base operations support, including facilities maintenance, clerical functions,
and other tasks. The government bid was originally calculated to be $7 million less
than a private contractor. The bids were later recalculated and it was determined the
private contractor’s bid was more favorable by the same $7 million amount.
The A-76 process had a huge destabilizing impact on the civilian workforce at
Walter Reed Army Medical Center. During times of declared war or military
mobilization, the Department of Defense can opt-out of the A-76 process. The
revised A-76 Circular, states “The Department of Defense Competitive Sourcing
Official (without delegation) shall determine if this circular applies to the Department
of Defense during times of declared war or military mobilization.”
The Department of Defense Competitive Sourcing Official is the Deputy
Undersecretary of Defense, Installations and Environment. Had the option to exclude
the Department of Defense from A-76 been exercised, significant personnel shortages
could have been avoided at a crucial time when Walter Reed Army Medical Center
and National Naval Medical Center were focused on the treatment of wounded, sick
or injured service members. With the local civilian personnel office focused on A-76
business, non-A-76 business, such as recruitment of healthcare personnel, was not
a priority. OMB Circular A-76 rests on a policy of subjecting commercial activities
to public-private competition. Testimony received by the Independent Review Group
The A-76 process created a destabilizing effect on the ability to hire and retain
qualified staff members to operate garrison functions. The cost savings proved to be
The implications of the A-76 program created yet another pressure for Walter
Reed Army Medical Center staff and leadership to overcome. The award of a contract
to a private vendor for facility maintenance resulted in a hiring freeze in June 2006
followed by a reduction in force (IF) action of civilian employees in August 2006.
The contractor, International American Products (IAP), however, did not begin work
until February 2007, which resulted in a serious shortage of staff for an eight month
period (June 2006 until Feb 2007). This action restricted leadership’s ability to hire
front desk clerks and administrative staff, resulting in critical staff shortages. The
most devastating effect of the hiring freeze was the impact on garrison and brigade
functions designed to support outpatient servicemembers and their families. The
long lag time from the announcement of the A-76 competition to contractor selection
and implementation led to staff shortages of more than 100 personnel during a time
the patient load was at peak levels.
The Secretary of Defense should provide the Service Secretaries the opportunity
to apply for regulatory relief from A-76 during a time of war; specifically for Walter
Reed and other military treatment facilities.
During a visit to Walter Reed Army Medical Center on March 30, 2007,
President George W. Bush affirmed, “The problems at Walter Reed were caused by
bureaucratic and administrative failures.” Assessments from the Department of
Army indicated that leadership was aware of complaints about administrative
processes and poor facility conditions at Walter Reed Army Medical Center and
either delayed in acting or failed to act altogether.
The Base Realignment and Closure decision to create the new Walter Reed
National Military Medical Center contributed to staffing problems, inattention of
leadership to day-to-day operations, and a lack of resources for capital improvements.
The Secretary of Defense should seek legislative approval to accelerate the
implementation of the BRAC Commission’s recommendations. Specifically,
accelerate or waive the Environmental Impact Competition (EIS), and release monies
required to start construction of the “new” Walter Reed National Military Medical
Center. (2) The existing facilities should not be allowed to “die on the vine.”
Expeditious integration of these two facilities will lessen the time Walter Reed Army
Medical Center is in a state of “limbo,” and can take advantage of economies at a
quicker pace while ultimately improving the treatment of eligible service members
and their families. The servicemembers and their families should not experience any
delays in service during this transition. Funding must be provided to maintain full
operation until the day of closure.
The A-76 process created a destabilizing effect on the ability to hire and retain
qualified staff members to operate garrison functions. The cost savings proved to be
The Secretary of Defense should provide the Service Secretaries [with] the
opportunity to apply for regulatory relief from A-76 during a time of war; specifically
for Walter Reed and other military treatment facilities.