Defense Management
DOD Needs to Reexamine Its Extensive Reliance on Contractors and Continue to Improve Management and Oversight Gao ID: GAO-08-572T March 11, 2008The federal government, including the Department of Defense (DOD), is increasingly relying on contractors to carry out its missions. Governmentwide spending on contractor services has more than doubled in the last 10 years. DOD has used contractors extensively to support troops deployed abroad. The department recently estimated the number of contractors in Iraq and Afghanistan to be about 196,000. DOD also relies heavily on contractors for various aspects of weapon system logistics support. While contractors, when properly used, can play an important role in helping agencies accomplish their missions, GAO has identified long-standing problems regarding the appropriate role and management of contractors, particularly at DOD. This testimony highlights the challenges federal agencies face related to the increased reliance on contractors and the specific challenges DOD has had in managing its increased reliance on contractors who support deployed troops and who provide logistics support for weapons systems. This testimony also highlights some of the recommendations GAO has made over the past several years to improve DOD's management and oversight of contractors, as well as DOD's actions in response to those recommendations.
While there are benefits to using contractors to perform services for the government--such as increased flexibility in fulfilling immediate needs--GAO and others have raised concerns about the increasing reliance on contractors to perform agency missions. GAO's body of work shows that agencies face challenges with increased reliance on contractors to perform core agency missions, and these challenges are accentuated in contingency operations such as Iraq, in emergency situations such as Hurricane Katrina, or in cases where sufficient government personnel are not available. In making the decision to use contractors, agencies have experienced challenges such as: determining which functions and activities should be contracted out and which should not to ensure institutional capacity; developing a total workforce strategy to address the extent of contractor use and the appropriate mix of contractor and government personnel; identifying and distinguishing the roles and responsibilities of contractors and civilian and military personnel; and ensuring appropriate oversight, including addressing risks, ethics concerns, and surveillance needs. DOD's increased reliance on contractors to support forces deployed for military operations and to perform maintenance and other logistic support for weapon systems has highlighted challenges that DOD faces in managing this component of its total force. With regard to contractor support for deployed forces, DOD's primary challenges have been to provide effective management and oversight, including failure to follow planning guidance, an inadequate number of contract oversight personnel, failure to systematically capture and distribute lessons learned, and a lack of comprehensive training for military commanders and contract oversight personnel. These challenges have led to negative operational and monetary impacts at deployed locations. For example, several military commanders GAO met with in 2006 said their pre-deployment training did not provide them with sufficient information on the extent of contractor support that they would be relying on in Iraq and were therefore surprised by the substantial number of personnel they had to allocate to provide on-base escorts, convoy security, and other force protection support to contractors. Although DOD has taken some steps to address these issues, many of these issues remain a concern and additional actions are needed. With respect to weapon system support, the challenges have been to resolve questions about how much depot maintenance and other logistics work needs to be performed in-house and to what extent outsourcing for DOD logistics has been cost-effective. While DOD has a process for defining core maintenance capability, GAO has identified shortcomings with this process and found that core maintenance capability has not always been developed. Finally, although increased contractor reliance for maintenance and other logistics activities was justified by DOD based on the assumption that there would be significant cost savings, it is uncertain to what extent cost savings have occurred or will occur.
GAO-08-572T, Defense Management: DOD Needs to Reexamine Its Extensive Reliance on Contractors and Continue to Improve Management and Oversight
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Testimony:
Before the Subcommittee on Readiness, Committee on Armed Services,
House of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 2 p.m. EDT:
Tuesday, March 11, 2008:
Defense Management:
DOD Needs to Reexamine Its Extensive Reliance on Contractors and
Continue to Improve Management and Oversight:
Statement of David M. Walker Comptroller General of the United States:
GAO-08-572T:
GAO Highlights:
Highlights of GAO-08-572T, a testimony before the Subcommittee on
Readiness, Committee on Armed Services, House of Representatives.
Why GAO Did This Study:
The federal government, including the Department of Defense (DOD), is
increasingly relying on contractors to carry out its missions.
Governmentwide spending on contractor services has more than doubled in
the last 10 years. DOD has used contractors extensively to support
troops deployed abroad. The department recently estimated the number of
contractors in Iraq and Afghanistan to be about 196,000. DOD also
relies heavily on contractors for various aspects of weapon system
logistics support.
While contractors, when properly used, can play an important role in
helping agencies accomplish their missions, GAO has identified long-
standing problems regarding the appropriate role and management of
contractors, particularly at DOD. This testimony highlights the
challenges federal agencies face related to the increased reliance on
contractors and the specific challenges DOD has had in managing its
increased reliance on contractors who support deployed troops and who
provide logistics support for weapons systems.
This testimony also highlights some of the recommendations GAO has made
over the past several years to improve DOD‘s management and oversight
of contractors, as well as DOD‘s actions in response to those
recommendations.
What GAO Found:
While there are benefits to using contractors to perform services for
the government”such as increased flexibility in fulfilling immediate
needs”GAO and others have raised concerns about the increasing reliance
on contractors to perform agency missions. GAO‘s body of work shows
that agencies face challenges with increased reliance on contractors to
perform core agency missions, and these challenges are accentuated in
contingency operations such as Iraq, in emergency situations such as
Hurricane Katrina, or in cases where sufficient government personnel
are not available. In making the decision to use contractors, agencies
have experienced challenges such as: determining which functions and
activities should be contracted out and which should not to ensure
institutional capacity; developing a total workforce strategy to
address the extent of contractor use and the appropriate mix of
contractor and government personnel; identifying and distinguishing the
roles and responsibilities of contractors and civilian and military
personnel; and ensuring appropriate oversight, including addressing
risks, ethics concerns, and surveillance needs.
DOD‘s increased reliance on contractors to support forces deployed for
military operations and to perform maintenance and other logistic
support for weapon systems has highlighted challenges that DOD faces in
managing this component of its total force. With regard to contractor
support for deployed forces, DOD‘s primary challenges have been to
provide effective management and oversight, including failure to follow
planning guidance, an inadequate number of contract oversight
personnel, failure to systematically capture and distribute lessons
learned, and a lack of comprehensive training for military commanders
and contract oversight personnel. These challenges have led to negative
operational and monetary impacts at deployed locations. For example,
several military commanders GAO met with in 2006 said their pre-
deployment training did not provide them with sufficient information on
the extent of contractor support that they would be relying on in Iraq
and were therefore surprised by the substantial number of personnel
they had to allocate to provide on-base escorts, convoy security, and
other force protection support to contractors. Although DOD has taken
some steps to address these issues, many of these issues remain a
concern and additional actions are needed. With respect to weapon
system support, the challenges have been to resolve questions about how
much depot maintenance and other logistics work needs to be performed
in-house and to what extent outsourcing for DOD logistics has been cost-
effective. While DOD has a process for defining core maintenance
capability, GAO has identified shortcomings with this process and found
that core maintenance capability has not always been developed.
Finally, although increased contractor reliance for maintenance and
other logistics activities was justified by DOD based on the assumption
that there would be significant cost savings, it is uncertain to what
extent cost savings have occurred or will occur.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.GAO-08-572T]. For more information, contact
William M. Solis at (202) 512-8365 or solisw@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to discuss the increased reliance on
contractors to conduct more and more of the business of the federal
government. In fiscal year 2007, the federal government spent about
$254 billion on contractor services, an amount that has more than
doubled over the past decade. The Department of Defense's (DOD)
obligations on service contracts, expressed in constant fiscal year
2006 dollars, rose from $85.1 billion in fiscal year 1996 to more than
$151 billion in fiscal year 2006, a 78 percent increase. With this
growth in spending, DOD has become increasingly reliant on contractors
both overseas and in the United States. For example, the department has
relied extensively on contractors for services that include
communication services, interpreters who accompany military patrols,
base operations support (e.g., food and housing), weapon systems
maintenance, and intelligence analysis to support military operations
in Southwest Asia. The U.S. military has long used contractors to
provide supplies and services to deployed forces, but the scale of
contractor support DOD relies on in deployed locations today has
increased considerably. DOD has recently estimated the number of
contractors in Iraq and Afghanistan to be about 196,000. Further, DOD
currently has the equivalent of three brigades of contractors providing
security services in Iraq, as well as another brigade equivalent
supporting these contractors--a total of about 12,000 personnel. Put
another way, there are more private security contractors in Iraq today
than the total number of contractors (about 9,200) that were deployed
to support military operations in the 1991 Gulf War. In addition to the
support contractors provide for military forces deployed overseas, DOD
has also increasingly relied on contractors for other services. For
example, we have reported in recent years on DOD's increasing reliance
on the private sector for various aspects of weapon system logistics
support, including depot-level maintenance.
While contractors, along with military personnel and civilians, are
part of DOD's total force and fulfill many vital functions that enable
DOD to accomplish its missions, the increased reliance on contractors
has raised a number of issues and concerns that warrant continued
attention. Our previous work has highlighted long-standing problems
regarding the appropriate role and management and oversight of
contractors in the federal workforce--particularly at DOD--and I have
identified 15 systemic acquisition challenges facing DOD (see app. I).
These challenges range from separating agency wants from needs to
creating a capable workforce and holding it accountable. Since 1992, we
have designated DOD contract management as a high-risk area, in part
due to concerns over the adequacy of the department's acquisition
workforce, including contract oversight personnel. Congress has
expressed increasing concerns about DOD's management and oversight of
contractors as well. For example, the National Defense Authorization
Act for Fiscal Year 2008 called for the creation of a Commission on
Wartime Contracting to make assessments of the government's reliance on
contractors in Iraq and Afghanistan and certain contract performance
and management issues related to those contracts. The act also created
a contingency contractor training requirement for military personnel
outside the acquisition workforce. Congress also has taken steps to
improve oversight by increasing the budgets for the Defense Contract
Audit Agency, Defense Contract Management Agency, and the Defense
Department's Inspector General in the fiscal year 2008 DOD
appropriations. As I have noted previously, given DOD's heavy and
increasing reliance on contractors in Iraq and elsewhere, and the risks
this reliance entails, it may be appropriate to ask if DOD has become
too reliant on contractors to provide essential services.[Footnote 1]
To help frame this issue today, I will highlight governmentwide
challenges we have identified related to the increased reliance on
contractors. Next, I will focus more specifically on challenges DOD has
had in managing the increased reliance on contractors who support
deployed troops and who provide logistics support for weapons systems.
I will conclude with some broad observations that Congress and DOD may
wish to consider in addressing these important issues.
My statement today is based primarily on our prior work and the work of
others at agencies across the federal government. Our work includes
reviews at the Departments of Defense, Homeland Security, and Energy,
the Environmental Protection Agency, and the National Aeronautics and
Space Administration. The work of others includes the congressionally
mandated Acquisition Advisory Panel and the Defense Acquisition
University. A list of related GAO products is provided at the end of
this statement. As part of ongoing work, we obtained updated
information on DOD's actions to address issues we have previously
raised. We developed this statement from February to March 2008 in
accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Summary:
While there are benefits to using contractors to perform services for
the government--such as increased flexibility in fulfilling immediate
needs--GAO and others have raised concerns about the increasing
reliance on contractors to perform agency missions. Our body of work
shows that agencies face challenges with increased reliance on
contractors to perform core agency missions, and these challenges are
accentuated in contingency operations such as Iraq, in emergency
situations such Hurricane Katrina, or in cases where sufficient
government personnel are not available. In making the decision to use
contractors, agencies have experienced challenges such as: determining
which functions and activities should be contracted out and which
should not to ensure institutional capacity; developing a total
workforce strategy to address the extent of contractor use and the
appropriate mix of contractor and government personnel; identifying and
distinguishing the roles and responsibilities of contractors and
civilian and military personnel; and ensuring appropriate oversight,
including addressing risks, ethics concerns, and surveillance needs.
DOD's increased reliance on contractors to support forces deployed for
military operations and to perform maintenance and other logistic
support for weapon systems has highlighted challenges that DOD faces in
managing this component of its total force. With regard to contractor
support for deployed forces, DOD's primary challenges have been to
provide effective management and oversight. These challenges include
failure to follow planning guidance, an inadequate number of contract
oversight personnel, failure to systematically capture and distribute
lessons learned, and a lack of comprehensive training for military
commanders and contract oversight personnel. These challenges have led
to negative operational and monetary impacts at deployed locations. For
example, several military commanders we met with in 2006 said their pre-
deployment training did not provide them with sufficient information on
the extent of contractor support that they would be relying on in Iraq
and were therefore surprised by the substantial number of personnel
they had to allocate to provide on-base escorts, convoy security, and
other force protection support to contractors. Although DOD has taken
some steps to address these issues, many of these issues remain a
concern and additional actions are needed. For example, in response to
our 2003 recommendation that DOD develop comprehensive guidance to help
the services manage contractors supporting deployed forces, the
department issued the first comprehensive guidance dealing with
contractors who support deployed forces in October 2005. However, as we
recently testified, DOD's leadership needs to ensure implementation of
and compliance with this guidance and other guidance.[Footnote 2] With
respect to weapon system support, the challenges have been to resolve
questions about how much depot maintenance and other logistics work
needs to be performed in- house and to what extent outsourcing for DOD
logistics has been cost- effective. While DOD has a process for
defining core maintenance capability, we have identified shortcomings
with this process and found that core maintenance capability has not
always been developed. Further, DOD does not have a process for
defining core capability requirements for other logistics functions and
activities, such as supply chain management and engineering. Finally,
although increased contractor reliance for maintenance and other
logistics activities was justified by DOD based on the assumption that
there would be significant cost savings, it is uncertain to what extent
cost savings have occurred or will occur.
Background:
Acquisition of products and services from contractors consumes about a
quarter of discretionary spending governmentwide, with services making
up roughly 60 percent. These services range from basic functions, such
as landscaping and janitorial, to those that are more complex, like
intelligence analysis, acquisition support, security services, and
program office support. The acquisition of services differs from that
of products in several key respects and can be particularly challenging
in terms of defining requirements and assessing contractor performance.
DOD is by far the largest federal purchaser of service contracts--
ranging from housing to intelligence to security.
Contractors can play an important part in helping agencies accomplish
their missions. For example, agencies use service contracts to acquire
special knowledge and skills not available in the government, obtain
cost-effective services, or obtain temporary or intermittent services.
The congressionally mandated Acquisition Advisory Panel[Footnote 3] has
cited a number of developments that have led federal agencies to
increase the use of contractors as service providers: limitations on
the number of authorized full-time equivalent positions; unavailability
of certain capabilities and expertise among federal employees; desire
for operational flexibility; and the need for "surge" capacity.
According to DOD and service officials, several factors have
contributed to the department's increased use of contractors for
support services: (1) the increased requirements associated with the
Global War on Terrorism and other contingencies; (2) policy to rely on
the private sector for needed commercial services that are not
inherently governmental in nature; and (3) DOD initiatives, such as
competitive sourcing and utility privatization programs.
The Office of Management and Budget (OMB), procurement law, and the
Federal Acquisition Regulation (FAR) provide guidance on contracting
for services. OMB Circular A-76 details a process for federal agencies
to obtain commercially available services currently performed by
government employees from the private sector when it is cost-effective
to do so.[Footnote 4] The Circular reinforces that government personnel
shall perform inherently governmental activities. This process does not
apply to private sector performance of a new requirement, expanded
activity, or continued performance of a commercial activity. As such,
this process effectively applies to a small percentage of the
government's contracting activity. Most of the growth in service
contracting has occurred outside of the A-76 process. The Federal
Activities Inventory Reform (FAIR) Act of 1998 further requires
agencies annually to determine and list which government-provided
agency activities are not inherently governmental functions.[Footnote
5] Federal procurement regulation states that functions that are so
intimately related to the public interest are considered inherently
governmental and should only be performed by government personnel.
These functions include those activities which require either the
exercise of discretion in applying government authority or the use of
value judgment in making decisions for the government, and should not
be performed by contractors.[Footnote 6] The FAR and OMB also require
agencies to provide greater scrutiny and management oversight when
contracting for services that closely support the performance of
inherently governmental functions.[Footnote 7] The closer contractor
services come to supporting inherently governmental functions, the
greater the risk of their influencing the government's control over and
accountability for decisions that may be based, in part, on contractor
work. This may result in decisions that are not in the best interest of
the government, and may increase vulnerability to waste, fraud, and
abuse.
Before I go into more detail on the issues surrounding the federal
government's and DOD's reliance on contractors, I would like to touch
on another subject of interest to the Subcommittee--DOD's application
of enhanced use leases. DOD's longstanding leasing authority is
codified at 10 U.S.C. 2667. The law provides general authority for the
Secretary of a military department to enter into a lease upon such
terms he considers will promote the national defense or be in the
public interest. The Secretary of a military department is authorized
to lease real property up to five years unless the Secretary determines
that a lease for a longer period will promote the nation defense or be
in the public interest. Over time, Congress has expanded DOD's leasing
authority several times to provide a lessee the first right to buy the
property and provide for payment in cash or in kind by the lessee of
consideration in an amount not less than the fair market value. Most
recently, the National Defense Authorization Act for Fiscal Year 2008
amended 10 U.S.C. 2667 in several ways; for example, the authority to
accept facilities operation support as in-kind consideration was
eliminated, and a requirement that leases meeting certain criteria be
competitively awarded was added.[Footnote 8] The services have leased
real property on their bases for years as a means to reduce
infrastructure and base operating costs. For example, the military
services have leased space for banks, credit unions, ATMs, storage,
schools, and agricultural grazing. As you know, Mr. Chairman, we are
conducting a review of DOD's land use planning activities, and will
have more to say on this issue later.
Federal Agencies Have Faced Challenges with Increased Reliance on
Contractors to Perform Agency Missions:
While there are benefits to using contractors to perform services for
the government--such as increased flexibility in fulfilling immediate
needs--GAO and others have raised concerns about the increasing
reliance on contractors to perform agency missions. Our work shows that
agencies face challenges with increased reliance on contractors to
perform core agency missions, especially in contingency or emergency
situations or in cases where sufficient government personnel are not
available. As I have previously stated, prior to making the decisions
to use contractors, agency officials should focus greater attention on
which functions and activities should be contracted out and which
should not. To guide this approach, agencies need to consider
developing a total workforce strategy to meet current and future human
capital needs, and address the extent of contractor use and the
appropriate mix of contractor and civilian and military personnel. I
have also noted that identifying and distinguishing the
responsibilities of contractors and civilian and military personnel are
critical to ensure contractor roles are appropriate. Finally, once
contractors are in place, agencies must ensure appropriate oversight of
contractors, including addressing risks, ethics concerns, and
surveillance needs.
Institutional Capacity: Agencies Face Challenges in Determining What
Functions and Activities Can be Contracted Out and What Should be
Provided by Government Personnel:
In order to determine what functions and activities can be contracted
out, the FAIR Act requires agencies annually to identify government-
performed agency activities that are not inherently governmental
functions. At GAO's 2006 forum on federal acquisition challenges and
opportunities, some participants noted that it might be more
appropriate for agencies to develop guiding principles or values to
determine which positions could be contracted out and which should be
performed in-house. Forum participants further noted that many
corporate organizations carefully deliberate up-front and at the
highest management levels about what core functions they need to retain
and what non-core functions they should buy, and the skill sets needed
to procure non-core functions.[Footnote 9]
DOD's Panel on Contracting Integrity, in its 2007 report to Congress,
noted that the practice of using contractors to support the government
acquisition function merits further study because it gives rise to
questions regarding the appropriate designation of government versus
nongovernment functions.[Footnote 10] A November 2005 report by the
Defense Acquisition University warned that the government must be
careful when contracting for the acquisition support function to ensure
that the government retains thorough control of policy and management
decisions and that contracting for the acquisition support function
does not inappropriately restrict agency management in its ability to
develop and consider options.[Footnote 11] Additionally, our prior work
has found that when federal agencies, including DOD, believe they do
not have the in-house capability to design, develop, and manage complex
acquisitions, they sometimes turn to a systems integrator to carry out
these functions, creating an inherent risk of relying too much on
contractors to make program decisions. For example, the Army's Future
Combat System program is managed by a lead systems integrator that
assumes the responsibilities of developing requirements; selecting
major system and subsystem contractors; and making trade-off decisions
among costs, schedules, and capabilities. While this management
approach has some advantages for DOD, we found that the extent of
contractor responsibility makes DOD vulnerable to decisions being made
by the contractor that are not in the government's best
interests.[Footnote 12]
In September 2007, we reported that an increasing reliance on
contractors to perform services for core government activities
challenges the capacity of federal officials to supervise and evaluate
the performance of these activities. I recently noted that this may be
a concern in the intelligence community.[Footnote 13] Specifically,
while direction and control of intelligence and counter-intelligence
operations are listed as inherently governmental functions, the
Director of National Intelligence reported in 2006 that the
intelligence community finds itself in competition with its contractors
for employees and is left with no choice but to use contractors for
work that may be "borderline inherently governmental."[Footnote 14] We
have also found problems with contractors having too much control at
other federal agencies.[Footnote 15] Unless the federal government pays
the needed attention to the types of functions and activities performed
by contractors, agencies run the risk of losing accountability and
control over mission-related decisions.
Workforce Planning: Agencies Face Challenges in Developing an
Appropriate Mix of Contractor and Government Personnel to Meet Current
and Future Needs:
Along with determining the functions and activities to be contracted
out, agencies face challenges in developing a total workforce strategy
to address the extent of contractor use and the appropriate mix of
contractor and civilian and military personnel. We have found that
agencies need appropriate workforce planning strategies that include
contractor as well as federal personnel and are linked to current and
future human capital needs. These strategies should be linked to the
knowledge, skills, and abilities needed by agencies and how the
workforce will be deployed across the organization. Deployment includes
the flexible use of the workforce, such as putting the right employees
in the right roles according to their skills, and relying on staff
drawn from various organizational components and functions using "just-
in-time" or "virtual" teams to focus the right talent on specific
tasks.[Footnote 16]
As agencies develop their workforce strategies, they also need to
consider the extent to which contractors should be used and the
appropriate mix of contractor and federal personnel. Over the past
several years, there has been increasing concern about the ability of
agencies to ensure sufficient numbers of staff to perform some
inherently governmental functions. The Department of Homeland
Security's human capital strategic plan notes the department has
identified core mission-critical occupations and plans to reduce skill
gaps in core and key competencies. However, it is unclear how this will
be achieved and whether it will inform the department's use of
contractors for services that closely support inherently governmental
functions. The Department of Homeland Security has agreed with the need
to establish strategic-level guidance for determining the appropriate
mix of government and contractor employees to meet mission
needs.[Footnote 17]
Roles and Responsibilities: Agencies Face Challenges in Defining the
Relationship between Contractors and Government Employees:
Agencies are challenged to define the roles and responsibilities of
contractors vis-à-vis government employees. Defining the relationship
between contractors and government employees is particularly important
when contracting for professional and management support services since
contractors often work closely with government employees to provide
these services. This definition begins during the acquisition planning
process when contract requirements are determined. We have recommended
that agencies define contract requirements to clearly describe roles,
responsibilities, and limitations of selected contractor services. Well-
defined contract requirements can also help minimize the risk of
contractors performing inherently governmental functions. Yet
contracts, especially service contracts, often do not have definitive
or realistic requirements at the outset. Because the nature of
contracted services can vary widely, from building maintenance to
intelligence, a tailored approach should be used in defining
requirements to help ensure that risks associated with a requirement
are fully considered before entering into a contract
arrangement.[Footnote 18] In our recent review of the Department of
Homeland Security's service contracts, we found that some contracts
included requirements that were broadly defined and lacked detail about
activities that closely support inherently governmental functions. We
found instances in which contractors provided services that were
integral to the department's mission or comparable to work performed by
government employees, such as a contractor directly supporting the
department's efforts to hire federal employees, including signing offer
letters.[Footnote 19]
Our work on contractors in acquisition support functions has found that
it is now commonplace for agencies to use contractors to perform
activities historically performed by federal government contract
specialists. Although these contractors are not authorized to obligate
government funds, they provide acquisition support to contracting
officers, the federal decision makers who have the authority to bind
the government contractually. Contract specialists perform tasks that
closely support inherently governmental functions, such as assisting in
preparing statements of work; developing and managing acquisition
plans; and preparing the documents the contracting officer signs, such
as contracts, solicitations, and contract modifications. Therefore, it
is important to clearly define the roles contractors play in supporting
government personnel to ensure they do not perform inherently
governmental functions.
Management and Oversight: Agencies Face Challenges in Assessing Risks,
Minimizing Potential Ethics Concerns, and Ensuring Quality
Surveillance:
Our work has also identified a number of practices that are important
to effectively managing and overseeing contractors once contractors are
in place. These include assessing risks, minimizing potential ethics
concerns, and ensuring quality through adequate surveillance. However,
agencies face challenges in all these areas.
Risk is innate when contractors closely support inherently governmental
functions. Federal procurement policy requires enhanced oversight of
services that closely support the performance of inherently
governmental functions to ensure that government decisions reflect the
independent judgment of agency officials and that agency officials
retain control over and remain accountable for policy decisions that
may be based on contractor work products. However, our work has shown
that agency officials do not always assess these risks to government
decision making. For example, in 2007 we reported that while Department
of Homeland Security program officials generally acknowledged that
their professional and management support services contracts closely
supported the performance of inherently governmental functions, they
did not assess the risk that government decisions may be influenced by
rather than independent from contractor judgments. Further, most of the
program officials and contracting officers we spoke with were not aware
of the requirement to provide enhanced oversight, and did not believe
that their professional and management support services needed enhanced
oversight.
Contractors are generally not subject to the same ethics rules as
government employees even when they are co-located and work side-by-
side with federal employees and perform similar functions. Federal
ethics rules and standards have been put in place to help safeguard the
integrity of the procurement process by mitigating the risk that
employees entrusted to act in the best interest of the government will
use their positions to influence the outcomes of contract awards for
future gain. In addition, as we reported in 2005, contractors we met
with indicated that DOD did not monitor their recruiting, hiring, and
placement practices for current and former government employees.
Consequently, DOD could not be assured that potential conflicts of
interest would be identified. A lack of awareness among government
employees of procurement integrity rules and conflict-of interest
considerations creates additional risk. For example, in 2005 we
reported that DOD did not know the content or frequency of ethics
training and counseling or which employees received information on
conflict-of-interest and procurement integrity. DOD also lacked
knowledge on reported allegations of potential misconduct.[Footnote 20]
In 2007, the Acquisition Advisory Panel recommended training for
contractors and government employees, and the development of standard
conflicts of interest clauses to include in solicitations and
contracts.
Quality assurance, especially regular surveillance and documentation of
its results, is essential to determine whether goods or services
provided by the contractor satisfy the contract requirements and to
minimize risks that the government will pay the contractor more than
the value of the goods and services. However, DOD officials have
expressed concerns about the current state of the acquisition workforce
to support surveillance and mentioned that surveillance remains an
"other duty as assigned" and, consequently, is a low-priority task. We
have also reported wide discrepancies in the rigor with which officials
responsible for surveillance perform their duties, particularly in
unstable environments. For example, in the aftermath of Hurricanes
Katrina and Rita, the number of government personnel monitoring
contracts was not always sufficient or adequately deployed to provide
effective oversight.[Footnote 21] Unfortunately, attention to oversight
has not always been evident in a number of instances, including during
the Iraq reconstruction effort. We have reported that, particularly in
the early phases of the Iraq reconstruction effort, several agencies
including the Army lacked an adequate acquisition workforce in Iraq to
oversee billions of dollars for which they were responsible. Further,
Army personnel who were responsible for overseeing contractor
performance of interrogation and other services were not adequately
trained to properly exercise their responsibilities. Contractor
employees were stationed in various locations around Iraq, with no
assigned representative on site to monitor their work. An Army
investigative report concluded that the number and training of
officials assigned to monitor contractor performance at Abu Ghraib
prison was not sufficient and put the Army at risk of being unaware of
possible misconduct by contractor personnel.[Footnote 22]
DOD Faces Challenges in Managing the Increased Role of Contractors
Performing Support Functions for Military Operations and Weapons
Systems:
DOD's increasing use of contractors to perform mission-support
functions, including contractors who support forces deployed for
military operations and contractors who perform maintenance and other
logistic support for weapon systems, has highlighted several challenges
that DOD faces in managing the increased role of this component of its
total force. With regard to contractor support to deployed forces,
DOD's primary challenges have been to provide effective management and
oversight. With respect to weapon system support, the challenges have
been to resolve questions about how much depot maintenance and other
logistic work needs to be performed in-house and about to what extent
outsourcing for DOD logistics has been cost-effective.
DOD has Experienced Long-Standing Problems with its Management and
Oversight of Contractors Supporting Deployed Forces, But Has Taken Some
Actions to Address these Problems:
Since 1997, we have reported on DOD's management and oversight
challenges related to its use of contractor support to deployed forces.
In December 2006, we issued a comprehensive review of DOD's management
and oversight of contractor support to deployed forces.[Footnote 23] We
reported that despite making progress in some areas, DOD continued to
face long-standing problems that hindered its management and oversight
of contractors at deployed locations. Those problems included issues
regarding visibility of contractors, numbers of contract oversight
personnel, lessons learned, and training of military commanders and
contract oversight personnel. More recently, we testified that DOD's
leadership needs to ensure implementation of and compliance with
guidance on the use of contractors to support deployed forces.
While DOD has long relied on contractors to support forces deployed for
military operations, the large influx of contractors in support of
operations in Iraq has exacerbated problems that DOD has had in
managing and overseeing their activities. Significantly, the individual
services and a wide array of DOD and non-DOD agencies can award
contracts to support deployed forces. For example, although DOD
estimated that as of the first quarter of fiscal year 2008, 163,590
contractors were supporting deployed forces in Iraq, no one person or
organization made a decision to send 163,590 contractors to Iraq.
Rather, decisions to send contractors to support forces in Iraq were
made by numerous DOD activities both within and outside of Iraq. This
decentralized process, combined with the scope and scale of contract
support to deployed forces, contributes to the complexity of the
problems we have identified in our past work on this topic.
DOD has taken a number of actions to implement recommendations that we
have made to improve its management of contractors. For example, in
response to our 2003 recommendation that DOD develop comprehensive
guidance to help the services manage contractors supporting deployed
forces, the department issued the first comprehensive guidance dealing
with contractors who support deployed forces in October 2005.
Additionally, in October 2006, DOD established the office of the
Assistant Deputy Under Secretary of Defense for Program Support to
serve as the office with primary responsibility for contractor support
issues. This office has led the effort to develop and implement a
database which, when fully implemented, will allow by-name
accountability of contractors who deploy with the force. This database
implements recommendations we made in 2003 and 2006 to enhance the
department's visibility over contractors in locations such as Iraq and
Afghanistan. Although DOD has taken these and other steps to address
these issues, we recently testified that many of these issues remain a
concern and additional actions are needed.[Footnote 24]
DOD Has Not Followed Long-Standing Planning Guidance Regarding the Use
of Contractors to Support Deployed Forces:
As we have noted in previous reports and testimonies, DOD has not
followed long-standing planning guidance, particularly by not
adequately factoring the use and role of contractors into its planning.
For example, we noted in 2003 that the operations plan for the war in
Iraq contained only limited information on contractor support.[Footnote
25] However, Joint Publication 4-0,[Footnote 26] which provides
doctrine and guidance for combatant commanders and their components
regarding the planning and execution of logistic support of joint
operations, stresses the importance of fully integrating into logistics
plans and orders the logistics functions performed by contractors along
with those performed by military personnel and government civilians.
Additionally, we reported in 2004 that the Army did not follow its
planning guidance when deciding to use the Army's Logistics Civil
Augmentation Program (LOGCAP) in Iraq.[Footnote 27] This guidance
stresses the need to clearly identify requirements and develop a
comprehensive statement of work early in the contingency planning
process. Because this Army guidance was not followed, the plan to
support the troops in Iraq was not comprehensive and was revised seven
times in less than 1 year.
Our 2003 report also concluded that essential contractor services had
not been identified and backup planning was not being done.[Footnote
28] DOD policy requires DOD and its components to determine which
contractor-provided services will be essential during crisis
situations, develop and implement plans and procedures to provide a
reasonable assurance of the continuation of essential services during
crisis situations, and prepare a contingency plan for obtaining the
essential service from an alternate source should the contractor be
unable to provide it. Without such plans, there is no assurance that
the personnel needed to provide the essential services would be
available when needed.
Moreover, as we reported in 2003 and 2006,[Footnote 29] senior leaders
and military commanders need information about the contractor services
they are relying on in order to incorporate contractor support into
their planning. For example, senior military commanders in Iraq told us
that when they began to develop a base consolidation plan for Iraq,
they had no source to draw upon to determine how many contractors were
on each installation. Limited visibility can also hinder the ability of
commanders to make informed decisions about base operations support
(e.g., food and housing) and force protection for all personnel on an
installation.
DOD has taken some action to address this problem. DOD is developing a
database of contractors who deploy with U.S. forces. According to
senior DOD officials familiar with this database, as of February 2008,
the database had about 80,000 records. DOD is working with the State
Department to include additional contractors, including private
security contractors, in the database. In addition, Joint Contracting
Command Iraq/Afghanistan has created the Theater Business Clearance
process that reviews and approves all contracts for work in Iraq or
Afghanistan. Joint Contracting Command Iraq/Afghanistan officials
stated that this has helped military commanders know ahead of time when
contractors are coming to work on their bases and ensure sufficient
facilities are available for them. According to senior DOD officials,
the department is also developing a cadre of contracting planners to
ensure that contractor support is included in combatant commanders'
operational and contingency planning.
DOD Lacks an Adequate Number of Trained Contract Oversight Personnel:
As we noted in several of our previous reports, having the right people
with the right skills to oversee contractor performance is crucial to
ensuring that DOD receives the best value for the billions of dollars
spent each year on contractor-provided services supporting forces
deployed to Iraq and elsewhere. However, since 1992, we have designated
DOD contract management as a high-risk area, in part due to concerns
over the adequacy of the department's acquisition workforce, including
contract oversight personnel. While this is a DOD-wide problem, having
too few contract oversight personnel presents unique difficulties at
deployed locations given the more demanding contracting environment as
compared to the United States.
Having an inadequate number of contract oversight personnel has
hindered DOD's ability to effectively manage and oversee contractors
supporting deployed forces and has had monetary impacts as well. For
example, in 2004 we reported that DOD did not always have enough
contract oversight personnel in place to manage and oversee its
logistics support contracts such as LOGCAP and the Air Force Contract
Augmentation Program (AFCAP).[Footnote 30] As a result, the Defense
Contract Management Agency was unable to account for $2 million worth
of tools that had been purchased using the AFCAP contract. During our
2006 review, several contract oversight personnel we met with told us
DOD does not have adequate personnel at deployed locations.[Footnote
31] For example, a contracting officer's representative for a
linguistic support contract told us that although he had a battalion's
worth of people with a battalion's worth of problems, he lacked the
equivalent of a battalion's staff to deal with those problems.
Similarly, an official with the LOGCAP Program Office told us that, had
adequate staffing been in place early, the Army could have realized
substantial savings through more effective reviews of the increasing
volume of LOGCAP requirements.
More recently, we reported that the Army did not have adequate staff to
oversee an equipment maintenance contract in Kuwait.[Footnote 32]
According to Army officials, vacant and reduced inspector and analyst
positions meant that surveillance was not being performed sufficiently
in some areas and the Army was less able to perform data analyses,
identify trends in contractor performance, and improve quality
processes. In addition, the 2007 report of the Commission on Army
Acquisition and Program Management in Expeditionary Operations stated
that the Army lacks the leadership and military and civilian personnel
to provide sufficient contracting support to either expeditionary or
peacetime missions.[Footnote 33] As a result, the commission found that
the vital task of post-award contract management is rarely being done.
As we noted in our 2006 report,[Footnote 34] without adequate contract
oversight personnel in place to monitor its many contracts in deployed
locations such as Iraq, DOD may not be able to obtain reasonable
assurance that contractors are meeting their contract requirements
efficiently and effectively.
DOD has taken some actions to address this problem. In February 2007,
the Deputy Assistant Secretary of the Army (Policy and Procurement)
issued guidance that required, among other things, contracting officers
to appoint certified contracting officer's representatives in writing
before contract performance begins, identify properly trained
contracting officer's representatives for active service contracts, and
ensure that a government quality assurance surveillance plan is
prepared and implemented for service contracts exceeding $2,500. Joint
Contracting Command Iraq/Afghanistan officials stated they are in the
process of adding 39 personnel to provide additional contractor
oversight. Similarly, the Defense Contract Management Agency has
deployed an additional 100 people and plans to deploy approximately 150
more people to provide contract oversight and management to both
ongoing and future contracts in Iraq. The agency is providing oversight
for DOD's private security contracts as well as other theaterwide
contracts. Additionally, senior DOD officials stated that the
department has created a task force to address the recommendations of
the October 2007 report by the Commission on Army Acquisition and
Program Management in Expeditionary Operations.
DOD Is Not Systematically Collecting and Distributing Lessons Learned:
Although DOD and its components have used contractors to support
deployed forces in several prior military operations, DOD does not
systematically ensure that institutional knowledge on the use of
contractors to support deployed forces, including lessons learned and
best practices, is shared with military personnel at deployed
locations. We previously reported that DOD could benefit from
systematically collecting and sharing its institutional knowledge to
help ensure that it is factored into planning, work processes, and
other activities.[Footnote 35] Although DOD has policy requiring the
collection and distribution of lessons learned to the maximum extent
possible, we found in our previous work that no procedures were in
place to ensure that lessons learned are collected and shared.
Moreover, although the Army regulation which establishes policies,
responsibilities, and procedures for the implementation of the LOGCAP
program makes customers that receive services under the LOGCAP contract
responsible for collecting lessons learned, we have repeatedly found
that DOD is not systematically collecting and sharing lessons learned
on the use of contractors to support to deployed forces. Despite years
of experience using contractors to support forces deployed to the
Balkans, Southwest Asia, Iraq, and Afghanistan, DOD has made few
efforts to leverage this institutional knowledge. As a result, many of
the problems we identified in earlier operations have recurred in
current operations.
During the course of our 2006 work, we found no organization within DOD
or its components responsible for developing procedures to capture
lessons learned on the use of contractor support at deployed
locations.[Footnote 36] We noted that when lessons learned are not
collected and shared, DOD and its components run the risk of repeating
past mistakes and being unable to build on the efficiencies and
effectiveness others have developed during past operations that
involved contractor support. We also found a failure to share best
practices and lessons learned between units as one redeploys and the
other deploys to replace it. As a result, new units essentially start
at ground zero, having to resolve a number of difficulties until they
understand contractor roles and responsibilities.
DOD Does Not Comprehensively Train Military Commanders and Contract
Oversight Personnel:
DOD does not routinely incorporate information about contractor support
for deployed forces in its pre-deployment training of military
personnel, despite the long-standing recognition of the need to provide
such information. We have discussed the need for better pre-deployment
training of military commanders and contract oversight personnel since
the mid-1990s and have made several recommendations aimed at improving
such training. Moreover, according to DOD policy, personnel should
receive timely and effective training to ensure they have the knowledge
and other tools necessary to accomplish their missions. Nevertheless,
we continue to find little evidence that improvements have been made in
terms of how DOD and its components train military commanders and
contract oversight personnel on the use of contractors to support
deployed forces prior to their deployment. Without properly trained
personnel, DOD will continue to face risks of fraud, waste, and abuse.
Limited or no pre-deployment training on the use of contractor support
can cause a variety of problems for military commanders in a deployed
location. As we reported in 2006, with limited or no pre-deployment
training on the extent of contractor support to deployed forces,
military commanders may not be able to adequately plan for the use of
those contractors.[Footnote 37] Similarly, in its 2007 report, the
Commission on Army Acquisition and Program Management in Expeditionary
Operations concluded that the Army needs to educate and train
commanders on the important operational role of contracting. Several
military commanders we met with in 2006 said their pre-deployment
training did not provide them with sufficient information on the extent
of contractor support that they would be relying on in Iraq and were
therefore surprised by the substantial number of personnel they had to
allocate to provide on-base escorts, convoy security, and other force
protection support to contractors. In addition, limited or no pre-
deployment training for military commanders can result in confusion
over their roles and responsibilities in managing and overseeing
contractors. For example, we found some instances where a lack of
training raised concerns over the potential for military commanders to
direct contractors to perform work outside the scope of the contract,
something commanders lack the authority to do. This can cause the
government to incur additional charges because modifications would need
to be made to the contract.
We also found that contract oversight personnel such as contracting
officer's representatives received little or no pre-deployment training
on their roles and responsibilities in monitoring contractor
performance. Many of the contracting officer's representatives we spoke
with in 2003 and 2006 said that training before they assumed these
positions would have better prepared them to effectively oversee
contractor performance. In most cases, deploying individuals were not
informed that they would be performing contracting officer's
representative duties until after they had deployed, which hindered the
ability of those individuals to effectively manage and oversee
contractors. For example, officials from a corps support group in Iraq
told us that until they were able to get a properly trained contracting
officer's representative in place, they experienced numerous problems
regarding the quality of food service provided by LOGCAP. In addition,
the 2007 report of the Commission on Army Acquisition and Program
Management in Expeditionary Operations discussed the need to train
contracting officer's representatives and warned that the lack of
training could lead to fraud, waste, and abuse.
DOD has taken some steps to address this problem. In DOD's response to
our 2006 report, the Director of Defense Procurement and Acquisition
Policy stated that the Army is making changes to its logistics training
programs that would incorporate contracting officer's representatives
training into its basic and advanced training for its ordnance,
transportation, and quartermaster corps.[Footnote 38] In addition, the
Defense Acquisition University has updated its contingency contracting
course to include a lesson on contractors accompanying the force.
Further, the Defense Contract Management Agency is adding personnel to
assist in the training and managing of contracting officer's
representatives.
Increased Reliance on Contractors for Weapon System Support Raises
Questions about Core Functions and Cost Effectiveness:
DOD has moved over the years toward greater use of the private sector
to perform maintenance and other logistics support for weapon systems.
Factors influencing this increased reliance on contractors include
changes in DOD's guidance and plans that emphasized the privatization
of logistics functions, a lack of technical data and modernized
facilities needed to perform maintenance on new systems, and reductions
in maintenance workers at government-owned depots. The move toward
greater reliance on contractors has raised questions regarding how much
depot maintenance and other logistics work needs to be performed in-
house and about the cost-effectiveness of outsourcing DOD logistics.
DOD Has Increasingly Relied on Contractors for Maintenance and Other
Logistic Support of Weapon Systems:
DOD has increasingly relied on contractors for maintenance and other
logistic support of weapon systems. For example, funding for private
sector contractors to perform depot maintenance[Footnote 39] increased
in then-year dollars from about $4.0 billion in fiscal year 1987 to
about $13.8 billion in fiscal year 2007, or 246 percent. In contrast,
during this same time period, the amount of funding for depot
maintenance performed at government (public) depots increased from
about $8.7 billion to about $16.1 billion, or 85 percent. This trend
toward greater reliance on the private sector for depot maintenance was
most evident during the period from fiscal years 1987 to 2000, when the
amount of funding for public depot maintenance largely stayed flat and
private sector funding increased by 89 percent. Since 2001, military
operations in support of the Global War on Terrorism have resulted in
large funding increases for maintenance performed by both public and
private sector activities.
One potential future limitation to continued contracting out of depot
maintenance activities is the statutory limit on the amount of funding
for depot maintenance work that can be performed by private sector
contractors. Under 10 U.S.C. 2466(a), not more than 50 percent of funds
made available in a fiscal year to a military department or defense
agency for depot-level maintenance and repair may be used to contract
for the performance by non-government personnel of such workload for
the military departments and defense agencies. As the contractors'
share has increased over time, managing within this limitation has
become more challenging--particularly for the Air Force and, to a
lesser extent, the Army. Another potential limitation to contracting
out is a requirement that DOD maintain a core logistics capability
within government facilities.[Footnote 40] However, as I will discuss,
our work has revealed problems in DOD's implementation of this
requirement.
DOD also has experienced significant growth in the overall use of
contractors for long-term logistics support of weapon systems.[Footnote
41] While the department does not collect and aggregate cost data
specifically on these support arrangements, available data illustrate
this growth. For example, Air Force data show an increase in funding
for these support arrangements from $910 million in fiscal year 1996 to
a projected $4.1 billion in fiscal year 2013. Many DOD acquisition
program offices have been adopting long-term support strategies for
sustaining new and modified systems that rely on contractors. Our
ongoing review of core logistics capability indicates that performance-
based logistics or some other type of partnership is a frequently used
weapon system sustainment approach.
Multiple Factors Have Influenced DOD's Increased Reliance on
Contracting:
The move toward increased use of contractors to perform maintenance and
other logistics support for weapon systems has been influenced by
multiple factors. A significant factor has been the shift in DOD's
guidance and plans that placed greater emphasis on privatizing
logistics functions. In 1996, for example, DOD issued a report, Plan
for Increasing Depot Maintenance Privatization and Outsourcing, which
provided a framework for substantially increasing reliance on the
private sector for depot maintenance. In addition, both the 1995 report
by the Commission on Roles and Missions[Footnote 42] and a 1996 report
by a Defense Science Board[Footnote 43] task force recommended that DOD
outsource almost all depot maintenance and other logistics activities.
Both study teams assumed large cost savings would result from increased
privatization. Today, DOD guidance provides that performance-based
logistics is now DOD's preferred approach for providing long-term total
system support for weapon systems. DOD describes performance-based
logistics as the process of (1) identifying a level of performance
required by the warfighter and (2) negotiating a performance-based
arrangement to provide long-term total system support for a weapon
system at a fixed level of annual funding.
Another factor in the move toward greater reliance on contractors has
been the lack of technical data and other elements of support, such as
modernized facilities, required to establish a maintenance capability
for new systems. Technical data for weapon systems include drawings,
specifications, standards, and other details necessary to ensure the
adequacy of item performance, as well as manuals that contain
instructions for installation, operation, maintenance, and other
actions needed to support weapon systems. As a result of not having
acquired technical data rights from the equipment manufacturers, the
military services in some instances have had difficulty establishing a
maintenance capability at government depots. For example, the Air Force
identified a need to develop a core capability to perform maintenance
on the C-17 aircraft at government depots, but lacked the requisite
technical data rights. Consequently, the Air Force has sought to form
partnerships with C-17 subvendors to develop a depot maintenance
capability, but these efforts have had mixed results. Based on our
ongoing review of DOD core capability, we found that the Air Force
continues to have challenges establishing core capability for C-17
commodities because of technical data issues.
A third factor influencing DOD's increasing reliance on contractor
support has been reductions in government depot maintenance personnel
available to perform the work. Personnel downsizing has greatly reduced
the number of depot maintenance workers and has limited the amount of
work that could be performed in the depots. Since 1987 the number of
depot-level maintenance personnel was reduced by 56 percent from a high
of 163,000 in 1987 to about 72,000 in 2002, after which the depots
began to see some personnel increases to support the Global War on
Terrorism. In comparison, in the 13 years between 1989 and 2002, DOD's
total civilian workforce had a 38 percent reduction. While some
downsizing was essential, given reductions in depot maintenance
workloads over the same period, mandated reductions in the number of
personnel were taken even though the depots may have had funded
workload to support an increased number of personnel. For example, in a
review of Army depot personnel reductions in 1998, we found that
efforts to implement the reductions at the Corpus Christi Army Depot
were poorly managed and more direct labor employees were reduced than
intended--adversely affecting the depot's productivity. We found that
while Army regulations on manpower management provide that staffing
levels are to be based on the workloads performed, the Army's reduced
staffing plan was developed in response to affordability concerns and a
desire to lower the depot's rates and did not support the depot's
funded workload requirement.[Footnote 44]
Uncertainties Exist About Maintaining Core Capability for Depot
Maintenance and Other Logistics Work:
Because DOD has not clearly and comprehensively identified what depot
maintenance and other logistics activities the department should be
performing itself, it is unclear how much of the work that has been
contracted out may be work that should be done in-house by government
personnel. Additionally, DOD has not identified core logistics
capability requirements for other logistics functions, such as supply
chain management and engineering.
With regard to depot maintenance, we previously reported that DOD lacks
assurance that core logistics capabilities were being maintained as
needed to ensure timely and effective response to national defense
emergencies and contingencies, as required by 10 U.S.C. 2464, noting
that several factors precluded this assurance.[Footnote 45] First,
DOD's existing policy, which establishes a process for identifying core
maintenance capability, was not comprehensive in that it did not
provide for a forward look at new weapon systems and associated future
maintenance capability requirements. Second, the various procedures and
practices being used by the services to implement the existing policy
were also affecting the establishment of core capability. For example,
the Air Force reduced its core requirement as a result of its
consideration of maintenance work performed in the private sector, even
though core work is supposed to be performed in military facilities and
by government personnel. In addition, we have noted that DOD has had
other limitations, including a lack of technical data rights and a lack
of sufficient investment in facilities, equipment, and human capital to
ensure the long-term viability of the military depots.
To improve its process for identifying core maintenance capability
requirements, in January 2007 DOD issued an instruction on how to
identify required core capabilities for depot maintenance, which
generally mirrored previous guidance.[Footnote 46] Also, in March 2007
DOD issued its depot maintenance strategy, which delineated the actions
DOD is undertaking to identify and sustain core maintenance capability.
We have an ongoing engagement to assess the effectiveness of the
current policy and procedures as well as the services' implementation.
To address issues inhibiting the establishment of core capability,
Congress has taken recent actions to address problems with technical
data and depot facilities. We previously recommended that DOD improve
its acquisition policies for assessing technical data needs to support
weapon systems.[Footnote 47] The John Warner National Defense
Authorization Act for Fiscal Year 2007 (2007 Defense Authorization Act)
mandated that DOD require program managers for major weapon systems to
assess long-term technical data needs for weapon systems and to
establish corresponding acquisition strategies that provide for
technical data rights needed to sustain such systems over their life
cycle.[Footnote 48] DOD subsequently issued a new policy in July 2007
to implement this requirement.[Footnote 49] Potential benefits from
this action are long term because of the time frames required for
developing and acquiring weapon systems, and it is uncertain what
actions may have been taken by program offices as a result of this
policy change or the extent in which any actions taken could improve
the availability of required data in the future. To address
inadequacies in the military's investments in its maintenance depots,
the 2007 Defense Authorization Act required military departments to
invest each fiscal year in the capital budgets of certain depots a
total amount equal to at least 6 percent of the average total combined
workload funded at all of the depots over the preceding 3 fiscal
years.[Footnote 50] As a part of an ongoing engagement, we are
reviewing the military departments' implementation of this mandate.
We have also reported that DOD has not established policies or
processes for determining core requirements for non-maintenance
logistics capabilities for activities such as supply support,
engineering, and transportation.[Footnote 51] Without identifying those
core logistics activities that need to be retained in-house, the
services may not be retaining critical capabilities as they proceed
with contracting initiatives. For example, if DOD implements
performance-based logistics--its preferred weapon system support
arrangement--at the platform level, this can result in contracting out
the program integration function, a core process which the private
sector firms we interviewed during a 2004 review considered integral to
their successful business operations. Another potential adverse effect
of awarding a performance-based contract at the platform level is the
loss of management control and expertise over the system that private
sector companies told us were essential to retain in-house. In an
earlier engagement, Army, Navy, and Air Force operational command
officials told us that among their concerns with various types of long-
term contractor logistics support arrangements were (1) retaining the
ability to maintain and develop critical technical skills and
knowledge, (2) limiting operational authority, and (3) reducing the
program office's ability to perform essential management functions.
Thus, without well-defined policy and procedures for identifying core
requirements for critical logistics areas, the department may not be in
a position to ensure that it will have the needed capabilities for the
logistics system to support essential military weapons and equipment in
an emergency.
Uncertainties Exist About Projected Cost Effectiveness of Outsourcing
Initiatives for DOD Logistics:
Although DOD justified its logistics outsourcing initiatives based on
the assumption that there would be significant cost savings, it is
uncertain to what extent cost savings have occurred or will occur.
Overall funding for depot maintenance costs and other logistics support
costs are increasing significantly, both for work that is performed in
military depots and by contractors. However, sufficient data are not
available to determine whether increased contracting has caused DOD's
costs to be higher than they would have been had the contracted
activities been performed by DOD civilians. As noted earlier,
assumptions about savings were a key part of DOD's shift in policy
toward the performance of defense logistics by the private sector.
While the 1995 Commission on Roles and Missions projected savings of 20
percent from outsourcing, we questioned this group's savings
assumptions, noting that its data did not support its depot
privatization savings assumptions.[Footnote 52] These assumptions were
based on reported savings from public-private competitions for
commercial activities under Office of Management and Budget Circular A-
76. The commercial activities were generally dissimilar to depot
maintenance activities because they involved relatively simple,
routine, and repetitive tasks that did not generally require large
capital investments or highly skilled and trained personnel. Public
activities were allowed to compete for these workloads and won about
half the competitions. Additionally, many private sector firms
generally made offers for this work due to the highly competitive
nature of the private sector market, and estimated savings were
generally greater in situations where there were larger numbers of
private sector offerors. In contrast, most depot maintenance work is
awarded without competition to the original equipment manufacturer. We
noted that in the absence of a highly competitive market, privatizing
unique, highly diverse, and complex depot maintenance workloads that
require large capital investments, extensive technical data, and highly
skilled and trained personnel would not likely achieve expected savings
and could increase the costs of depot maintenance operations. We also
questioned the Defense Science Board's projections of $30 billion in
annual savings from privatizing almost all logistics support
activities.
We have also reported that whereas DOD expected to achieve large
savings from its contracting out of more of its depot-level maintenance
work, depot maintenance contracting represented a challenge to relying
on commercial market forces. Whereas DOD was attempting to rely on
competitive market forces, about 91 percent of the depot maintenance
contracts we reviewed were awarded noncompetitively. We also noted that
difficulties in precisely defining requirements also affected DOD's
efforts to rely on competitive market forces. Further, we cautioned
that DOD would need to increase the use of competitively awarded depot
maintenance contracts and to address how best to assure product quality
and reasonable prices when competitive market forces were not present.
We have also raised questions about cost savings from DOD's increased
use of performance-based logistics. Although DOD guidance recommends
that program offices perform a business case analysis before adopting a
performance based logistics approach to support weapon system, our
reviews of the implementation of this approach show these analyses are
not often done and DOD program offices could not demonstrate that they
had achieved cost savings.[Footnote 53] Of the 15 programs we reviewed,
11 program offices had developed a business case analysis--prior to
entering into a performance-based logistics arrangement--which
projected achieving significant cost savings. Only one of these
programs offices had updated its business case analysis with actual
cost data as recommended by DOD guidance. The one program office that
did update its business case analysis determined that the contract did
not result in the expected cost savings and subsequently restructured
the program. Program office officials acknowledged limitations in their
own information systems in providing reliable data to closely monitor
contractor costs. While existing systems are capable of collecting some
cost information, they are not capturing sufficiently detailed cost
information for monitoring the performance-based logistics contracts.
Our 2005 report on DOD's implementation of performance-based logistics
included a recommendation on the validation of business case decisions
to demonstrate whether they are resulting in reduced costs and
increased performance. Also, given the stated limitations in cost
information, we recommended that program offices be required to improve
their monitoring of performance-based logistics arrangements by
verifying the reliability of contractor cost and performance data.
Although DOD concurred with our recommendations, we are currently
evaluating the corrective actions taken. In addition, DOD currently
does not require detailed reporting of contractor logistics support
costs, including for performance based arrangements.
Concluding Observations:
In closing, I believe that we must engage in a fundamental
reexamination of when and under what circumstances we should use
contractors versus civil servants or military personnel. This is a
major and growing concern that needs immediate attention. In general, I
believe there is a need to focus greater attention on what type of
functions and activities should be contracted out and which ones should
not. Inherently governmental functions are required to be performed by
government personnel, not private contractors. Government officials, in
making decisions about whether to use contractors for services closely
supporting inherently governmental functions, should assess risk and
consider the need for enhanced management and oversight controls. Once
the decision to contract has been made, we must address challenges we
have observed in ensuring proper oversight of these arrangements--
especially considering the evolving and enlarging role of contractors
in federal acquisitions. These concerns, identified in our work at
several federal agencies including DOD, are more complex to address and
may take on greater significance in contingency or military operations.
As we have witnessed with contractors in Iraq, a specific decision made
by a contractor can impact U.S. strategic and operational objectives in
ways that were not considered in making the initial contracting
decision.
To address these concerns with regard to contractor support to deployed
forces, we believe that in the immediate future, DOD's leadership needs
to ensure implementation of and compliance with relevant existing
guidance. In the longer term, we believe a broader examination of the
use and role of contractors to support deployed forces is in order. As
I stated in April 2007, it may be appropriate to ask if DOD has become
too reliant on contractors to provide essential services.[Footnote 54]
What is needed is a comprehensive, forward-looking, and integrated
review of contractor support to deployed forces that provides the
proper balance between contractor support and the core capabilities of
military forces over the next several years. In a November 2007
briefing on DOD transformation, I called on DOD to employ a total force
management approach to planning and execution (e.g. military, civilian,
and contractors).[Footnote 55] Many of the problems we have identified
regarding the management and oversight of contractor support to
deployed forces stem from DOD's reluctance to plan for contractors as
an integral part of the total force. One way DOD could begin to address
this issue is by incorporating the use and role of contractors into its
readiness reporting. DOD regularly reports on the readiness status,
capabilities assessments, and other reviews of the status and
capabilities of its forces. Given the reality that DOD is dependent on
contractors for much of its support in deployed locations, the
department should include information on the specific missions
contractors will be asked to perform, the operational impacts
associated with the use of contractors, and the personnel necessary to
effectively oversee and manage those contractors.
Mr. Chairman, this concludes my prepared statement. I would be happy to
respond to any questions you or other Members of the Subcommittee may
have at this time.
Contacts and Acknowledgments:
For further information regarding this testimony, please contact
William M. Solis at (202) 512-8365 or (solisw@gao.gov) or John Hutton
at (202) 512-4841 or (huttonj@gao.gov). Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this product. Staff making key contributions to this statement
were Julia Denman, Tom Gosling, Amelia Shachoy, Assistant Directors;
Carleen Bennett, Laura Holliday, Randy Neice, Janine Prybyla, James
Reynolds, Bill Russell, Karen Sloan, and Karen Thornton.
[End of section]
Appendix I: Systemic Acquisition Challenges at the Department of
Defense:
1. Service budgets are allocated largely according to top line
historical percentages rather than Defense-wide strategic assessments
and current and likely resource limitations.
2. Capabilities and requirements are based primarily on individual
service wants versus collective Defense needs (i.e., based on current
and expected future threats) that are both affordable and sustainable
over time.
3. Defense consistently overpromises and underdelivers in connection
with major weapons, information, and other systems (i.e., capabilities,
costs, quantities, and schedule).
4. Defense often employs a "plug and pray approach" when costs escalate
(i.e., divide total funding dollars by cost per copy, plug in the
number that can be purchased, then pray that Congress will provide more
funding to buy more quantities).
5. Congress sometimes forces the department to buy items (e.g., weapon
systems) and provide services (e.g., additional health care for non-
active beneficiaries, such as active duty members' dependents and
military retirees and their dependents) that the department does not
want and we cannot afford.
6. DOD tries to develop high-risk technologies after programs start
instead of setting up funding, organizations, and processes to conduct
high-risk technology development activities in low-cost environments,
(i.e., technology development is not separated from product
development). Program decisions to move into design and production are
made without adequate standards or knowledge.
7. Program requirements are often set at unrealistic levels, then
changed frequently as recognition sets in that they cannot be achieved.
As a result, too much time passes, threats may change, or members of
the user and acquisition communities may simply change their mind. The
resulting program instability causes cost escalation, schedule delays,
smaller quantities and reduced contractor accountability.
8. Contracts, especially service contracts, often do not have
definitive or realistic requirements at the outset in order to control
costs and facilitate accountability.
9. Contracts typically do not accurately reflect the complexity of
projects or appropriately allocate risk between the contractors and the
taxpayers (e.g., cost plus, cancellation charges).
10. Key program staff rotate too frequently, thus promoting myopia and
reducing accountability (i.e., tours based on time versus key
milestones). Additionally, the revolving door between industry and the
department presents potential conflicts of interest.
11. The acquisition workforce faces serious challenges (e.g., size,
skills, knowledge, and succession planning).
12. Incentive and award fees are often paid based on contractor
attitudes and efforts versus positive results (i.e., cost, quality, and
schedule).
13. Inadequate oversight is being conducted by both the department and
Congress, which results in little to no accountability for recurring
and systemic problems.
14. Some individual program and funding decisions made within the
department and by Congress serve to undercut sound policies.
15. Lack of a professional, term-based Chief Management Officer at the
department serves to slow progress on defense transformation and reduce
the chance of success in the acquisitions/contracting and other key
business areas.
[End of section]
Related GAO Products:
Acquisition Management:
Defense Contracting: Additional Personal Conflict of Interest
Safeguards Needed for Certain DOD Contractor Employees. GAO-08-169.
Washington, D.C.: March. 7, 2008.
Intelligence Reform: GAO Can Assist the Congress and the Intelligence
Community on Management Reform Initiatives. GAO-08-413T. Washington,
D.C.: February 29, 2008.
Federal Acquisition: Oversight Plan Needed to Help Implement
Acquisition Advisory Panel Recommendations. GAO-08-160. December 20,
2007.
Department of Homeland Security: Improved Assessment and Oversight
Needed to Manage Risk of Contracting for Selected Services. GAO-07-990.
Washington, D.C.: September 17, 2007.
Federal Acquisitions and Contracting: Systemic Challenges Need
Attention. GAO-07-1098T. Washington, D.C.: July 17, 2007.
Defense Acquisitions: Role of Lead Systems Integrator on Future Combat
Systems Program Poses Oversight Challenges. GAO-07-380. Washington,
D.C.: June 6, 2007.
Highlights of a GAO Forum: Federal Acquisition Challenges and
Opportunities in the 21st Century. GAO-07-45SP. Washington, D.C.: Oct.
6, 2006.
Contract Management: DOD Vulnerabilities to Contracting Fraud, Waste,
and Abuse. GAO-06-838R. Washington, D.C.: July 7, 2006.
Agency Management of Contractors Responding to Hurricane Katrina and
Rita, GAO-06-461R. Washington, D.C.: March 16, 2006.
Defense Ethics Program: Opportunities Exist to Strengthen Safeguards
for Procurement Integrity. GAO-05-341. Washington, D.C.: April 29,
2005.
Interagency Contracting: Problems with DOD's and Interior's Orders to
Support Military Operations. GAO-05-201. Washington, D.C.: April 25,
2005.
Rebuilding Iraq: Fiscal Year 2003 Contract Award Procedures and
Management Challenges. GAO-04-605. Washington, D.C.: June 1, 2004.
Human Capital: Key Principles for Effective Strategic Workforce
Planning. GAO-04-39. Washington, D.C.: December 11, 2003.
Human Capital: A Self-Assessment Checklist for Agency Leaders. GAO/GGD-
99-179. Washington, D.C.: September 1, 1999.
Government Contractors: Are Service Contractors Performing Inherently
Governmental Functions? GAO/GGD -92-11. Washington, D.C.: November 18,
1991.
Energy Management: Using DOE Employees Can Reduce Costs for Some
Support Services. GAO/RCED 91-186. Washington, D.C.: August 16, 1991.
Civil Servants and Contractor Employees: Who Should Do What for the
Federal Government? FPCD-81-43. Washington, D.C.: June 19, 1981.
Reliance on Contractors to Support Deployed Forces:
Military Operations: Implementation of Existing Guidance and Other
Actions Needed to Improve DOD's Oversight and Management of Contractors
in Future Operations. GAO-08-436T. Washington, D.C.: January 24, 2008.
Defense Logistics: The Army Needs to Implement an Effective Management
and Oversight Plan for the Equipment Maintenance Contract in Kuwait.
GAO-08-316R. Washington, D.C.: January 23, 2008.
Defense Acquisitions: Improved Management and Oversight Needed to
Better Control DOD's Acquisition of Services. GAO-07-832T. Washington,
D.C.: May 10, 2007.
Military Operations: High-Level DOD Action Needed to Address Long-
standing Problems with Management and Oversight of Contractors
Supporting Deployed Forces. GAO-07-145. Washington, D.C.: December 18,
2006.
Rebuilding Iraq: Continued Progress Requires Overcoming Contract
Management Challenges. GAO-06-1130T. Washington, D.C.: September 28,
2006.
Military Operations: Background Screenings of Contractor Employees
Supporting Deployed Forces May Lack Critical Information, but U.S.
Forces Take Steps to Mitigate the Risks Contractors May Pose. GAO-06-
999R. Washington, D.C.: September 22, 2006.
Rebuilding Iraq: Actions Still Needed to Improve the Use of Private
Security Providers. GAO-06-865T. Washington, D.C.: June 13, 2006.
Rebuilding Iraq: Actions Needed to Improve Use of Private Security
Providers. GAO-05-737. Washington, D.C.: July 28, 2005.
Interagency Contracting: Problems with DOD's and Interior's Orders to
Support Military Operations. GAO-05-201. Washington, D.C.: April 29,
2005.
Defense Logistics: High-Level DOD Coordination Is Needed to Further
Improve the Management of the Army's LOGCAP Contract. GAO-05-328.
Washington, D.C.: March 21, 2005.
Contract Management: Opportunities to Improve Surveillance on
Department of Defense Service Contracts. GAO-05-274. Washington, D.C.:
March 17, 2005.
Military Operations: DOD's Extensive Use of Logistics Support Contracts
Requires Strengthened Oversight. GAO-04-854. Washington, D.C.: July 19,
2004.
Military Operations: Contractors Provide Vital Services to Deployed
Forces but Are not Adequately Addressed in DOD Plans. GAO-03-695.
Washington, D.C.: June 24, 2003.
Contingency Operations: Army Should Do More to Control Contract Cost in
the Balkans. GAO/NSIAD-00-225. Washington, D.C.: September 29, 2000.
Contingency Operations: Opportunities to Improve the Logistics Civil
Augmentation Program. GAO/NSIAD-97-63. Washington, D.C.: February 11,
1997.
Reliance on Contractors for Weapon System Logistic Support:
Defense Management: DOD Needs to Demonstrate That Performance-Based
Logistics Contracts Are Achieving Expected Benefits. GAO-05-966.
Washington, D.C.: September 9, 2005.
Defense Management: Opportunities to Enhance the Implementation of
Performance-Based Logistics. GAO-04-715. Washington, D.C.: August 16,
2004.
Depot Maintenance: Key Unresolved Issues Affect the Army Depot System's
Viability. GAO-03-682. Washington, D.C.: July 7, 2003.
Depot Maintenance: Public-Private Partnerships Have Increased, but Long-
Term Growth and Results Are Uncertain. GAO-03-423. Washington, D.C:
April 10, 2003.
Defense Logistics: Opportunities to Improve the Army's and the Navy's
Decision-making Process for Weapons Systems Support. GAO-02-306.
Washington, D.C.: February 28, 2002.
Defense Logistics: Actions Needed to Overcome Capability Gaps in the
Public Depot System. GAO-02-105. Washington D.C.: October 12, 2001:
Defense Logistics: Air Force Lacks Data to Assess Contractor Logistics
Support Approaches. GAO-01-618. Washington, D.C.: September 7, 2001.
Army Industrial Facilities: Workforce Requirements and Related Issues
Affecting Depots and Arsenals. GAO/NSIAD-99-31. Washington. D.C.:
November 30, 1998.
Defense Depot Maintenance: DOD Shifting More Workload for New Weapon
Systems to the Private Sector. GAO/NSIAD-98-8. Washington, D.C.: March
31, 1998.
Defense Depot Maintenance: Commission on Roles and Missions'
Privatization Assumptions Are Questionable. GAO/NSIAD-06-161.
Washington, D.C.: July 15, 1996.
Defense Depot Maintenance: DOD's Policy Report Leaves Future Role of
Depot System Uncertain. GAO/NSIAD-96-165. Washington, D.C.: May 21,
1996.
Defense Depot Maintenance: Privatization and the Debate Over the Public-
Private Mix. GAO/T-NSIAD-96-146. Washington, D.C.: April 16, 1996.
Depot Maintenance: Issues in Allocating Workload Between the Public and
Private Sectors. GAO/T-NSIAD-94-161. Washington, D.C.: April 12, 1994.
Depot Maintenance: Issues in Management and Restructuring to Support a
Downsized Military. GAO/T-NSIAD-93-13. Washington, D.C.: May 6, 1993.
[End of section]
Footnotes:
[1] GAO, Stabilizing and Rebuilding Iraq: Conditions in Iraq Are
Conducive to Fraud, Waste, and Abuse, GAO-07-525T (Washington, D.C.:
Apr. 23, 2007).
[2] GAO, Military Operations: Implementation of Existing Guidance and
Other Actions Needed to Improve DOD's Oversight and Management of
Contractors in Future Operations, GAO-08-436T (Washington, D.C.: Jan.
24, 2008).
[3] The Panel was established by section 1423 of the Services
Acquisition Reform Act of 2003, Pub. L. No 108-136, Title XIV. The
Report of the Acquisition Advisory Panel to the Office of Federal
Procurement Policy and the United States Congress was dated January
2007.
[4] Office of Management and Budget Circular A-76 (Revised) (May 29,
2003).
[5] Pub. L. No. 105-270, §2(a) (1998). In 1999, OMB incorporated the
FAIR Act requirements into the A-76 process.
[6] FAR §2.101.
[7] FAR §37.114; OFPP Policy Letter 93-1: Management Oversight of
Services Contracting, Office of Federal Procurement Policy, May 18,
1994.
[8] National Defense Authorization Act for Fiscal Year 2008, Pub. L.
No. 110-181, § 2823 (2008).
[9] GAO, Highlights of a GAO Forum: Federal Acquisition Challenges and
Opportunities in the 21st Century, GAO-07-45SP (Washington, D.C.: Oct.
6, 2006).
[10] The Panel was established by section 813 of the John Warner
National Defense Authorization Act for Fiscal Year 2007, Pub. L. No.
109-364 (2006). Its 2007 Report to Congress was the first of three
annual reports mandated by the act.
[11] Defense Acquisition University, Contracting Out Procurement
Functions: An Analysis, DAU Research Report 06-001 (Fort Belvoir, VA.:
November 2005).
[12] GAO, Defense Acquisitions: Role of Lead Systems Integrator on
Future Combat Systems Program Poses Oversight Challenges, GAO-07-380
(Washington, D.C.: June 6, 2007).
[13] GAO, Intelligence Reform: GAO Can Assist the Congress and the
Intelligence Community on Management Reform Initiatives, GAO-08-413T
(Washington, D.C.: Feb. 29, 2008).
[14] The U.S. Intelligence Community's Five Year Strategic Human
Capital Plan.
[15] See for example, GAO, Civil Servants and Contractor Employees: Who
Should Do What for the Federal Government? FPCD-81-43 (Washington,
D.C.: June 19, 1981); GAO, Energy Management: Using DOE Employees Can
Reduce Costs for Some Support Services, GAO/RCED 91-186 (Washington,
D.C.: Aug. 16, 1991); GAO, Government Contractors: Are Service
Contractors Performing Inherently Governmental Functions? GAO/ GGD-92-
11 (Washington, D.C.: Nov. 18, 1991).
[16] GAO, Human Capital: A Self-Assessment Checklist for Agency
Leaders, GAO/GGD-99-179 (Washington, D.C.: Sept. 1, 1999).
[17] GAO, Department of Homeland Security: Improved Assessment and
Oversight Needed to Manage Risk of Contracting for Selected Services,
GAO-07-990 (Washington, D.C.: Sept. 17, 2007).
[18] GAO, Defense Acquisitions: Tailored Approach Needed to Improve
Service Acquisition Outcomes, GAO-07-20 (Washington, D.C.: Nov. 9,
2006).
[19] GAO-07-990.
[20] GAO, Defense Ethics Program: Opportunities Exist to Strengthen
Safeguards for Procurement Integrity, GAO-05-341 (Washington, D.C.:
Apr. 29, 2005).
[21] GAO, Agency Management of Contractors Responding to Hurricane
Katrina and Rita, GAO-06-461R (Washington, D.C.: Mar. 16, 2006).
[22] GAO, Interagency Contracting: Problems with DOD's and Interior's
Orders to Support Military Operations, GAO-05-201 (Washington, D.C.:
Apr. 25, 2005).
[23] GAO, Military Operations: High-Level DOD Action Needed to Address
Long-standing Problems with Management and Oversight of Contractors
Supporting Deployed Forces, GAO-07-145 (Washington, D.C.: Dec. 18,
2006).
[24] GAO-08-436T.
[25] GAO, Military Operations: Contractors Provide Vital Services to
Deployed Forces but Are Not Adequately Addressed in DOD Plans, GAO-03-
695 (Washington, D.C.: June 24, 2003).
[26] The Joint Chiefs of Staff, Doctrine for Logistic Support of Joint
Operations, Joint Publication 4-0 (Washington, D.C.: April 2000).
[27] GAO, Military Operations: DOD's Extensive Use of Logistics Support
Contracts Requires Strengthened Oversight, GAO-04-854 (Washington,
D.C.: July 19, 2004).
[28] GAO-03-695.
[29] GAO-03-695 and GAO-07-145.
[30] GAO-04-854.
[31] GAO-07-145.
[32] GAO, Defense Logistics: The Army Needs to Implement an Effective
Management and Oversight Plan for the Equipment Maintenance Contract in
Kuwait, GAO-08-316R (Washington, D.C.: Jan. 22, 2008).
[33] Commission on Army Acquisition and Program Management in
Expeditionary Operations, Urgent Reform Required: Army Expeditionary
Contracting (Oct. 31, 2007).
[34] GAO-07-145.
[35] GAO, Information Technology: DOD Needs to Leverage Lessons Learned
from Its Outsourcing Projects, GAO-03-371 (Washington, D.C.: Apr. 25,
2003); and Military Training: Potential to Use Lessons Learned to Avoid
Past Mistakes Is Largely Untapped, GAO/NSIAD-95-152 (Washington, D.C.:
Aug. 9, 1995).
[36] GAO-07-145.
[37] GAO-07-145.
[38] GAO-07-145.
[39] Depot maintenance is the highest level of maintenance within DOD
and generally refers to major maintenance and repairs, such as
overhauling, upgrading, or rebuilding parts, assemblies, or
subassemblies. Depot maintenance has long been provided by a mix of
government-owned depots and private contractors.
[40] Section 2464 of Title 10 of the U.S. Code provides that it is
essential for the national defense that DOD maintain a core logistics
capability that is government-owned and government-operated to ensure
the existence of a ready and controlled source of technical competence
and resources necessary to ensure a timely and effective military
response to mobilizations, national defense emergencies, and
contingencies.
[41] Contractor logistics support arrangements may involve the
contractor performing maintenance, assuming responsibility for life-
cycle management of the system, and performing sustainment activities,
including parts management. These arrangements may take various forms,
including performance-based logistics.
[42] Commission on Roles and Missions, Directions for Defense (May 24,
1995).
[43] Defense Science Board, Report of the Defense Science Board Task
Force on Outsourcing and Privatization (August 1996). Also see Defense
Science Board, Report on the Defense Science Board 1996 Summer Study on
Achieving an Innovative Support Structure for 21st Century Military
Superiority: Higher Performance at Lower Costs (November 1996).
[44] GAO, Army Industrial Facilities: Workforce Requirements and
Related Issues Affecting Depots and Arsenals, GAO/NSIAD-99-31
(Washington, D.C.: Nov. 30, 1998).
[45] GAO, Defense Logistics: Actions Needed to Overcome Capability Gaps
in the Public Depot System, GAO-02-105 (Washington. D.C.: Oct. 12,
2001).
[46] DOD Instruction 4151.20 (Jan. 5, 2007) states that pursuant to DOD
policy, DOD components must apply the core capability requirements
determination process to identify required core capabilities and the
workloads necessary to sustain effectively the core capabilities.
[47] GAO, Weapons Acquisition: DOD Should Strengthen Policies for
Assessing Technical Data Needs to Support Weapon Systems, GAO-06-839
(Washington, D.C.: July 14, 2006).
[48] Pub. L. No. 109-364, § 802 (2006).
[49] A July 19, 2007 memorandum from the Under Secretary of Defense
(Acquisition, Technology, and Logistics) for the service acquisition
executives required that program managers assess the long-term
technical data needs of their systems and reflect that assessment in a
data management strategy which must be integrated with other life-cycle
sustainment planning, assess certain data requirements, and address the
merits of a priced contract option for the future delivery of technical
data.
[50] Pub. L. No. 109-364, § 332 (2006).
[51] GAO-02-105.
[52] GAO, Defense Depot Maintenance: Commission on Roles and Mission's
Privatization Assumptions Are Questionable, NSIAD-96-161 (Washington,
D.C.: July 15, 1996).
[53] GAO, Defense Management: DOD Needs to Demonstrate That Performance-
Based Logistics Contracts Are Achieving Expected Benefits, GAO-05-966
(Washington, D.C.: Sept. 9, 2005).
[54] GAO-07-525T.
[55] GAO, Defense Transformation: Challenges and Opportunities, GAO-08-
323CG (Washington, D.C.: Nov. 29, 2007).
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