A new report on the Forest Service shows that the agency spent less on salaries for information technology employees last year than it did the previous year and that it plowed most of the savings into new software applications.

The trend is one of several that the National Academy of Public Administration (NAPA) identified in its first-year assessment of the Forest Service’s Information Solutions Organization, a federal employee group that won a competitive sourcing bid a year ago. NAPA, a congressionally chartered nonprofit group of public policy experts, advises federal, state and local governments.

Under the Forest Service’s stripped-down IT organization, the ratio of IT spending as a percent of the agency’s budget inched upward slightly more than a percentage point — from 9.2 percent in fiscal 2005 to a projected 10.3 percent in fiscal 2006, according to the NAPA report. That trend will continue in fiscal 2007, when the agency expects to spend 11.3 percent of its budget on IT.

Employee groups, such as the one created at the Forest Service, are known as most efficient organizations (MEOs) in the policy language of the Office of Management and Budget’s Circular A-76. That policy requires federal agencies to form MEOs and invite companies to bid against them to win contracts for IT infrastructure support or other jobs that, according to the policy, are not inherently a function of government.

The Forest Service’s winning proposal offered to save the agency $106 million in the next five years. In its first year of operation, the MEO was $270,000 below its spending target, according to the NAPA report. But the MEO’s second-year costs will be higher than originally proposed because the Forest Service revised a plan to consolidate more than 100 servers. That consolidation plan would have eliminated about 40 full-time IT server-support positions this year, for a savings of $9.7 million in five years.

Overall, NAPA said it found the MEO’s projected five-year savings credible, but it urged the Forest Service and other agencies to keep track of competitive sourcing savings on an agencywide basis.

“It does no good to show savings within the MEO if costs rise elsewhere in the agency as a result,” the assessment stated. According to NAPA, agencies must be prepared to prove to Congress and administration officials that reductions in the number of full-time employees are not offset by increases in outsourcing contracts and that employees reassigned to new duties are not performing their old duties in some other part of the agency.