Defense Management
Actions Needed to Overcome Long-standing Challenges with Weapon Systems Acquisition and Service Contract Management Gao ID: GAO-09-362T February 11, 2009Today's testimony addresses the challenges DOD faces to improve the efficiency and effectiveness of its weapon systems acquisition and contract management. GAO has designated both areas as high risk areas since the early 1990s. DOD's major weapon systems programs continue to take longer to develop, cost more, and deliver fewer quantities and capabilities than originally planned. DOD also continues to face long-standing challenges managing service contracts and contractors. For example, the oversight of service contracts has been recognized as a material weakness in the Army. The current fiscal environment combined with the current operational demands elevates the need to improve weapon systems acquisition and contract management. DOD has taken steps in response to recommendations GAO has made over the past decade. Taken collectively, these actions reflect the commitment of DOD senior leadership. However, to fully address these challenges the department needs to (1) translate policy into practice, (2) ensure steps undertaken result in intended outcomes, and (3) conduct a fundamental reexamination of its reliance on contractors. In preparing this testimony, GAO drew from issued reports, containing statements of scope and methodology used, and testimonies.
Several underlying systemic problems at the strategic level and at the program level continue to contribute to poor weapon systems acquisition. The total acquisition cost of DOD's 2007 portfolio of major programs has grown by 26 percent over initial estimates. At the strategic level, DOD does not prioritize weapon system investments, and its processes for matching warfighter needs with resources are fragmented and broken. DOD largely continues to define warfighting needs and make investment decisions on a service-by-service basis and assesses these requirements and their funding implications under separate decision-making processes. Invariably, DOD and the Congress end up continually shifting funds to and from programs--undermining well-performing programs to pay for poorly performing ones. At the program level, weapon system programs are initiated without sufficient knowledge about requirements, technology, and design maturity. Instead, managers rely on assumptions that are consistently too optimistic, exposing programs to significant and unnecessary risks and ultimately cost growth and schedule delays. In December 2008, DOD revised its guidance to improve its acquisition of major weapon systems, consistent with recommendations GAO has made. We have previously raised concerns, however, with DOD's implementation of guidance on weapon systems acquisition. In fiscal year 2008, DOD obligated about $200 billion for contractor-provided services, more than doubling the amount it spent a decade ago when measured in real terms. GAO's previous work has highlighted several examples of the risks inherent in using contractors, including ethics concerns, diminished institutional capacity, potentially greater costs, and mission risks. Further, the lack of well-defined requirements, difficulties employing sound business practices, and workforce and training issues hinder efforts to effectively manage and oversee contracts and contractors. These factors ultimately contribute to higher costs, schedule delays, unmet goals, and negative operational impacts. These issues take on a heightened significance in Iraq and Afghanistan, where DOD estimated that more than 200,000 contractor personnel were engaged as of July 2008, exceeding the number of uniformed military personnel there. As of October 2008, the number of contractor personnel in both countries had increased to over 230,000. DOD has taken several steps in response to GAO's recommendations aimed at improving management and oversight of contractors. These include issuing policy and guidance addressing contract management, identifying skill gaps in DOD's acquisition workforce, improving training for military commanders and contract oversight personnel, and creating a focal point within the department for issues associated with the use of contractors to support deployed forces. DOD, however, has not conducted a comprehensive assessment to determine the appropriate mix of military, civilian, and contractor personnel.
GAO-09-362T, Defense Management: Actions Needed to Overcome Long-standing Challenges with Weapon Systems Acquisition and Service Contract Management
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United States Government Accountability Office:
GAO:
Testimony:
Before the Subcommittee on Defense, Committee on Appropriations, House
of Representatives:
For Release on Delivery:
Expected at 1:30 p.m. EST:
February 11, 2009:
Defense Management:
Actions Needed to Overcome Long-standing Challenges with Weapon Systems
Acquisition and Service Contract Management:
Statement of Gene L. Dodaro:
Acting Comptroller General of the United States:
GAO-09-362T:
GAO Highlights:
Highlights of GAO-09-362T, a testimony before the Subcommittee on Defense, Committee on Appropriations, House of Representatives.
Why GAO Did This Study:
Today‘s testimony addresses the challenges DOD faces to improve the efficiency and effectiveness of its weapon systems acquisition and contract management. GAO has designated both areas as high risk areas since the early 1990s. DOD‘s major weapon systems programs continue to take longer to develop, cost more, and deliver fewer quantities and capabilities than originally planned. DOD also continues to face long-standing challenges managing service contracts and contractors. For example, the oversight of service contracts has been recognized as a material weakness in the Army. The current fiscal environment combined with the current operational demands elevates the need to improve weapon systems acquisition and contract management.
DOD has taken steps in response to recommendations GAO has made over the past decade. Taken collectively, these actions reflect the commitment of DOD senior leadership. However, to fully address these challenges the department needs to (1) translate policy into practice, (2) ensure steps undertaken result in intended outcomes, and (3) conduct a fundamental reexamination of its reliance on contractors.
In preparing this testimony, GAO drew from issued reports, containing statements of scope and methodology used, and testimonies.
What GAO Found:
Several underlying systemic problems at the strategic level and at the program level continue to contribute to poor weapon systems acquisition. The total acquisition cost of DOD‘s 2007 portfolio of major programs has grown by 26 percent over initial estimates. At the strategic level, DOD does not prioritize weapon system investments, and its processes for matching warfighter needs with resources are fragmented and broken. DOD largely continues to define warfighting needs and make investment decisions on a service-by-service basis and assesses these requirements and their funding implications under separate decision-making processes. Invariably, DOD and the Congress end up continually shifting funds to and from programs”undermining well-performing programs to pay for poorly performing ones. At the program level, weapon system programs are initiated without sufficient knowledge about requirements, technology, and design maturity. Instead, managers rely on assumptions that are consistently too optimistic, exposing programs to significant and unnecessary risks and ultimately cost growth and schedule delays. In December 2008, DOD revised its guidance to improve its acquisition of major weapon systems, consistent with recommendations GAO has made. We have previously raised concerns, however, with DOD‘s implementation of guidance on weapon systems acquisition.
In fiscal year 2008, DOD obligated about $200 billion for contractor-provided services, more than doubling the amount it spent a decade ago when measured in real terms. GAO‘s previous work has highlighted several examples of the risks inherent in using contractors, including ethics concerns, diminished institutional capacity, potentially greater costs, and mission risks. Further, the lack of well-defined requirements, difficulties employing sound business practices, and workforce and training issues hinder efforts to effectively manage and oversee contracts and contractors. These factors ultimately contribute to higher costs, schedule delays, unmet goals, and negative operational impacts. These issues take on a heightened significance in Iraq and Afghanistan, where DOD estimated that more than 200,000 contractor personnel were engaged as of July 2008, exceeding the number of uniformed military personnel there. As of October 2008, the number of contractor personnel in both countries had increased to over 230,000. DOD has taken several steps in response to GAO‘s recommendations aimed at improving management and oversight of contractors. These include issuing policy and guidance addressing contract management, identifying skill gaps in DOD‘s acquisition workforce, improving training for military commanders and contract oversight personnel, and creating a focal point within the department for issues associated with the use of contractors to support deployed forces. DOD, however, has not conducted a comprehensive assessment to determine the appropriate mix of military, civilian, and contractor personnel.
To view the full product, including the scope and methodology, click on [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-09-362T]. For more information, contact Janet St. Laurent at (202) 512-4402 or stlaurentj@gao.gov or Katherine V Schinasi at (202) 512-4841 or schinasik@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
I appreciate the opportunity to be here today to discuss the challenges
the Department of Defense (DOD) must overcome if it is to improve the
efficiency and effectiveness of its weapon systems acquisitions and
service contract management. This hearing is timely--about 3 weeks ago,
we issued our 2009 update to our high-risk series that identified both
of these areas as being at risk for fraud, waste, abuse and
mismanagement.[Footnote 1] The issues we identified in each area are
not new; we first designated DOD weapon systems acquisition as a high-
risk area in 1990, and 2 years later, we took the same action with
regard to DOD contract management.
With an annual appropriation of about $512 billion in fiscal year 2009
and supplemental funding of about $807 billion over the past several
years to support the global war on terrorism, DOD has a larger budget
than any other federal agency. As the Secretary of Defense testified
last month, however, "the spigot of defense funding opened by 9/11 is
closing." The Secretary noted that with two major ongoing campaigns,
the economic crisis and resulting budget pressures will force hard
choices on DOD, including hard choices regarding defense acquisitions.
He further identified defense acquisition as the chief institutional
challenge facing the department. While the combat effectiveness of U.S.
forces and weapon systems is unparalleled, DOD has not been as
effective in managing its ongoing business operations, which have
adversely affected mission performance and increased the department's
vulnerability to fraud, waste, abuse, and mismanagement. The
department's senior leadership has shown a commitment to transforming
business operations, including its weapon systems acquisition and
contract management processes, but challenges remain in sustaining and
building on this momentum.
DOD's major weapon systems continue to take longer to develop, cost
more, and deliver fewer quantities and capabilities than originally
planned. Current operational demands have highlighted the impact of
these persistent problems as DOD has been forced to work outside of its
traditional acquisition process to acquire equipment that meets
warfighter needs, as was the case with the Mine Resistant Ambush
Protected vehicle. Further, investment in weapons acquisition programs
is now at its highest level in two decades. The department was expected
to invest more than $357 billion over the next 5 years on the
development and procurement of major defense acquisition programs.
Given the size of this investment, poor outcomes in DOD's weapon system
programs reverberate across the entire federal government. Every dollar
wasted during the development and acquisition of weapon systems is
money not available for other priorities within DOD and across the
government.
In fiscal year 2008, DOD spent about $200 billion on contractor
services, an amount that has more than doubled in real terms over the
past decade. In Iraq and Afghanistan, the number of contractor
personnel now exceeds the number of uniformed military personnel. In
both the United States and at deployed locations, DOD relies heavily on
contractors to help meet critical missions. At installations within the
United States, contractors provide base operations support (e.g., food
and housing) and other administrative and logistical support. In Iraq
and Afghanistan, contractors not only provide traditional logistical
support--such as base operations support and the maintenance of weapons
systems--but also intelligence analysis and interpreters who accompany
military patrols. It is important to note that the increased use of
contractors both in the United States and at deployed locations is the
result of thousands of individual decisions and not the result of
comprehensive planning across the department. For example, the
Secretary of Defense recently stated that the growth of contractor
services in Iraq in many respects happened without a coherent strategy.
GAO has issued numerous reports over the last decade discussing DOD's
long-standing challenges managing and overseeing service contractors. A
recent memorandum issued by the Assistant Secretary of the Army for
Acquisition, Logistics, and Technology underscored these challenges,
stating that oversight of service contracts is a recognized material
weakness in the Army and that when appropriate contract administration
is not performed or is performed only by exception, it exposes the Army
to an unacceptable risk of contract fraud and affects the Army's
ability to fully leverage all its resources toward prosecuting the
global war on terrorism. He went on to note that nothing short of a
culture change is needed to correct the contract administration
problems the Army continues to experience.
Today, I will discuss the challenges that affect DOD's acquisition of
major weapon systems, DOD's management and oversight service contracts,
and steps DOD has taken in response to our recommendations for these
issues. I will conclude with some observations on what further actions
the department should take to address these challenges.
In preparing this testimony, we relied on our extensive body of work on
DOD's acquisition of weapon systems and contract management issues. A
list of these products is provided in appendix II. This work was
conducted 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.
Fragmented Processes, Unexecutable Business Cases, and Lack of
Knowledge Underlie Poor Weapon Program Outcomes:
Since fiscal year 2000, DOD has significantly increased the number of
major defense acquisition programs and its overall investment in them.
During this same time period, acquisition outcomes have not improved.
For example, in last year's assessment of selected DOD weapon programs,
we found that total acquisition costs for the fiscal year 2007
portfolio of major defense acquisition programs increased 26 percent
and development costs increased by 40 percent from first estimates--
both of which are higher than the corresponding increases in DOD's
fiscal year 2000 portfolio.[Footnote 2] In most cases, the programs we
assessed failed to deliver capabilities when promised--often forcing
warfighters to spend additional funds on maintaining legacy systems.
Our analysis showed that current programs experienced, on average, a 21-
month delay in delivering initial capabilities to the warfighter, a 5-
month increase over fiscal year 2000 programs as shown in table 1.
Continued cost growth results in less funding being available for other
DOD priorities and programs, while continued failure to deliver weapon
systems on time delays providing critical capabilities to the
warfighter. We are currently updating our analysis and intend to issue
our assessment of DOD's current portfolio in March.
Table 1: Analysis of DOD Major Defense Acquisition Program Portfolios:
Fiscal year 2008 dollars:
Portfolio size:
Number of programs:
Fiscal year: 2000 portfolio: 75;
Fiscal year: 2005 portfolio: 91;
Fiscal year: 2007 portfolio: 95.
Total planned commitments:
Fiscal year: 2000 portfolio: $790 billion;
Fiscal year: 2005 portfolio: $1.5 trillion;
Fiscal year: 2007 portfolio: $1.6 trillion.
Commitments outstanding:
Fiscal year: 2000 portfolio: $380 billion;
Fiscal year: 2005 portfolio: $887 billion;
Fiscal year: 2007 portfolio: $858 billion.
Portfolio performance:
Change to total RDT&E costs from first estimate:
Fiscal year: 2000 portfolio: 27 percent;
Fiscal year: 2005 portfolio: 33 percent;
Fiscal year: 2007 portfolio: 40 percent.
Change in total acquisition cost from first estimate:
Fiscal year: 2000 portfolio: 6 percent;
Fiscal year: 2005 portfolio: 18 percent;
Fiscal year: 2007 portfolio: 26 percent.
Estimated total acquisition cost growth:
Fiscal year: 2000 portfolio: $42 billion;
Fiscal year: 2005 portfolio: $202 billion;
Fiscal year: 2007 portfolio: $295 billion.
Share of programs with 25 percent or more increase in program
acquisition unit cost:
Fiscal year: 2000 portfolio: 37 percent;
Fiscal year: 2005 portfolio: 44 percent;
Fiscal year: 2007 portfolio: 44 percent.
Average schedule delay in delivering initial capabilities:
Fiscal year: 2000 portfolio: 16 months;
Fiscal year: 2005 portfolio: 17 months;
Fiscal year: 2007 portfolio: 21 months.
Source: GAO analysis of DOD data.
Note: Data were obtained from DOD's Selected Acquisition Reports (dated
December 1999, 2004, and 2006) or in a few cases, data were obtained
directly from program offices. Number of programs reflects the programs
with Selected Acquisition Reports. In our analysis we have broken a few
Selected Acquisition Report programs (such as Missile Defense Agency
systems) into smaller elements or programs. Not all programs had
comparative cost and schedule data, and these programs were excluded
from the analysis where appropriate. Also, data do not include full
costs of developing Missile Defense Agency systems.
[End of table]
Several underlying systemic problems at the strategic level and at the
program level continue to contribute to poor weapon system program
outcomes. At the strategic level, DOD does not prioritize weapon system
investments and the department's processes for matching warfighter
needs with resources are fragmented and broken.[Footnote 3] DOD largely
continues to define warfighting needs and make investment decisions on
a service-by-service basis and assess these requirements and their
funding implications under separate decision-making processes.
Ultimately, the process produces more demand for new programs than
available resources can support, promoting an unhealthy competition for
funds that encourages programs to pursue overly ambitious capabilities,
develop unrealistically low cost estimates and optimistic schedules,
and to suppress bad news. Similarly, DOD's funding process does little
to prevent programs from going forward with unreliable cost estimates
and lengthy development cycles, which is not a sound basis for
allocating resources and ensuring program stability. Invariably, DOD
and the Congress end up continually shifting funds to and from
programs--undermining well-performing programs to pay for poorly
performing ones.
At the program level, programs are started without knowing what
resources will truly be needed and are managed with lower levels of
product knowledge at critical junctures than expected under best
practices standards. For example, in our March 2008 assessment, we
found that only 12 percent of the 41 programs we reviewed had matured
all critical technologies at the start of the development effort.
[Footnote 4] None of the 26 programs we reviewed that were at or had
passed their production decisions had obtained adequate levels of
knowledge. In the absence of such knowledge, managers rely heavily on
assumptions about system requirements, technology, and design maturity,
which are consistently too optimistic. These gaps are largely the
result of a lack of a disciplined systems engineering[Footnote 5]
analysis prior to beginning system development, as well as DOD's
tendency to allow new requirements to be added well into the
acquisition cycle. This exposes programs to significant and unnecessary
technology, design, and production risks, and ultimately damaging cost
growth and schedule delays. With high-levels of uncertainty about
technologies, design, and requirements, program cost estimates and
related funding needs are often understated, effectively setting
programs up for failure.
When DOD consistently allows unsound, unexecutable programs to pass
through the requirements, funding, and acquisition processes,
accountability suffers. Program managers cannot be held accountable
when the programs they are handed already have a low probability of
success. Moreover, program managers are not empowered to make go or no-
go decisions, have little control over funding, cannot veto new
requirements, have little authority over staffing, and are frequently
changed during a program's development. Consequently, DOD officials are
rarely held accountable for these poor outcomes, and the acquisition
environment does not provide the appropriate incentives for contractors
to stay within cost and schedule targets, making them strong enablers
of the status quo.
With regard to improving its acquisition of weapon systems, DOD has
made changes consistent with the knowledge-based approach to weapons
development that GAO has recommended in its work. In December 2008, DOD
revised DOD Instruction 5000.02, which provides procedures for managing
major defense acquisition programs in ways that aim to provide key
department leaders with the knowledge needed to make informed decisions
before a program starts and to maintain discipline once it begins. For
example, the revised instruction includes procedures for the completion
of key systems engineering activities before the start of the systems
development, a requirement for more prototyping early in programs, and
the establishment of review boards to monitor weapon system
configuration changes. At the same time, DOD must begin making better
choices that reflect joint capability needs and match requirements with
resources. Given the nation's ongoing financial and economic crisis,
DOD's investment decisions cannot continue to be driven by the military
services that propose programs that overpromise capabilities and
underestimate costs simply to start and sustain development programs.
DOD Continues to Face Long-standing Challenges Managing Service
Contracts and Contractors:
DOD Has Yet to Fully Assess Which Functions and Activities Should be
Performed by Contractors, Limiting Its Ability to Mitigate Risks:
DOD has increasingly relied on contractors to support its missions and
operations, due in part to such factors as the reductions in DOD's
civilian and military personnel following the collapse of the Soviet
Union, the increasing complexity of weapons systems, and more recently,
the increased demands related to the global war on terrorism, such as
the need for large numbers of Arabic speakers. DOD officials have
stated that without a significant increase in its civilian and military
workforce, the department is likely to continue to rely on contractors
both in the United States and overseas in support of future
deployments. For example, in October 2008, the then-Under Secretary of
the Army stated that the Army has more requirements than available
force structure and that much of the Army's mission would be impossible
without the support provided by contractors. Similarly, the Deputy
Under Secretary of Defense for Logistics and Materiel Readiness
testified in 2008 that the structure of the U.S. military has been
adapted to an environment in which contractors are an indispensable
part of the force. In that regard, DOD estimated that more than 230,000
contractor personnel were supporting operations in Iraq and Afghanistan
as of October 2008.
This reliance on contractors to support DOD's current mission was not
the result of a strategic or deliberate process but resulted from
thousands of individual decisions to use contractors to provide
specific capabilities. As the Secretary of Defense testified last
month, DOD has not thought holistically or coherently about the
department's use of contractors particularly when it comes to combat
environments. DOD has long-standing guidance for determining the
appropriate mix of manpower--military, civilian, and contractors--
necessary to accomplish the department's mission. This guidance,
however, is primarily focused on individual decisions whether to use
contractors to provide specific capabilities and not the overarching
question of what the appropriate role of contractors should be. In
October 2008, the Under Secretary of the Army acknowledged that DOD has
not made much progress in assessing the appropriate role of contractors
on the battlefield and stated that any serious or purposeful discussion
about the future size of the Army must include the role of contractors.
We have increasingly called for DOD to be more strategic in how it uses
contractors. For example, in November 2006, we reported that DOD lacked
a proactive strategic approach to managing services acquisitions and
needed to determine, among other things, areas of specific risks that
were inherent when acquiring services and that should be managed with
greater attention.[Footnote 6] Indeed, we have called on DOD to conduct
a fundamental reexamination of when and under what circumstances DOD
should use contractors as opposed to civil servants or military
personnel. Similarly, in January 2008, we testified that DOD needs to
determine the appropriate balance between contractors and military
personnel in deployed locations.[Footnote 7] Without a fundamental
understanding of its reliance on contractors and the capabilities they
should provide, DOD's ability to mitigate the risks associated with
using contractors is limited.
Our previous work has highlighted several examples of the risks
inherent to using contractors, including ethics concerns, diminished
institutional capacity, potentially greater costs, and mission risks.
Examples include:
* Certain contractor employees often work side-by-side with government
employees, performing such tasks as studying alternative ways to
acquire desired capabilities, developing contract requirements, and
advising or assisting on source selection, budget planning, and award-
fee determinations. Contractor employees are generally not subject,
however, to the same laws and regulations that are designed to prevent
conflicts of interests among federal employees.[Footnote 8]
* The Army Contracting Agency's Contracting Center of Excellence relied
on contractors to support acquisition and contracting decisions, which
raised concerns about the Army's efforts to mitigate the risks of
conflicts of interest or losing control over decision making.[Footnote
9] Similarly, for 11 Air Force space program offices, contractors
accounted for 64 percent of cost-estimating personnel, raising
questions from the cost-estimating community about whether numbers and
qualifications of government personnel are sufficient to provide
oversight of and insight into contractor cost estimates.[Footnote 10]
* One underlying premise of using contractors is that doing so will be
more cost-effective than using government personnel. This may not
always be the case. In one instance, we found that the Army Contracting
Agency's Contracting Center of Excellence was paying up to 27 percent
more for contractor-provided contract specialists than it would have
for similarly graded government employees.
* Reliance on contractors can create mission risks when contractors are
supporting deployed forces. For example, because contractors cannot be
ordered to serve in contingency environments, the possibility that they
will not deploy can create risks that the mission they support may not
be effectively carried out. Further, if commanders are unaware of their
reliance on contractors they may not realize that substantial numbers
of military personnel may be redirected from their primary
responsibilities to provide force protection or assume functions
anticipated to be performed by contractors and commanders therefore may
not plan accordingly. The Chairman of the Joint Chiefs of Staff has
directed the Joint Staff to examine the use of DOD service contracts
(contractors) in Iraq and Afghanistan in order to better understand the
range and depth of contractor capabilities necessary to support the
Joint Force.
In assessing the appropriate role of contractors, it is important to
recognize that contractors can provide important benefits such as
flexibility to fulfill immediate needs. In some cases, DOD's specific
needs may be too limited, too technical or have other characteristics
that do not make it cost-effective for DOD to develop an organic
capability. For example, we reported in 2008 that the repair of battle-
damaged Stryker vehicles was contracted out because DOD did not have
people with the specific welding skills required to perform this type
of repair.[Footnote 11] In other cases, contractors are used because
they are cheaper. For example, we reported in 2007 that the Army's
decision to contract for the operation and maintenance of the firing
range at Fort Hood resulted in an estimated $6 million savings.
[Footnote 12] In addition, both DOD and others have stated the
department has limited capacity to pick up some or all of the
capabilities currently provided by contractors. For example, DOD has
reported that replacing the 13,000 armed private security contractors
currently supporting the department in Iraq and Afghanistan, would
require at least an additional 40,000 military personnel, given DOD's
current rotation policies.
DOD Continues to Face Challenges in Employing Sound Business Practices
When Contracting for and Managing Service Contracts:
Once the decision has been made to use contractors to support DOD's
missions or operations, it is essential that DOD clearly defines its
requirements and employs sound business practices, such as using
appropriate contracting vehicles and the collection and distribution of
critical information. Our work, however, on DOD's use of time-and-
materials contracts and undefinitized contract actions--two contracting
practices that are often used when requirements are uncertain or
changing--identified weaknesses in DOD's management and oversight,
increasing the government's risk. Examples include:
* In June 2007, we found numerous issues with DOD's use of time-and-
materials contracts.[Footnote 13] DOD reported that it obligated nearly
$10 billion under time-and-materials contracts in fiscal year 2005,
acquiring, among other services, professional, administrative, and
management support services. Some specific examples of the services DOD
acquired included subject matter experts in the intelligence field and
systems engineering support. These contracts are appropriate when
specific circumstances justify the risks, but our findings indicate
that they are often used as a default for a variety of reasons--ease,
speed, and flexibility when requirements or funding are uncertain. Time-
and-materials contracts are considered high risk for the government
because they provide no positive profit incentive to the contractor for
cost control or labor efficiency and their use is supposed to be
limited to cases where no other contract type is suitable. We found,
however, that DOD underreported its use of time-and-materials
contracts; frequently did not justify why time-and-materials contracts
were the only contract type suitable for the procurement; made few
attempts to convert follow-on work to less risky contract types; and
was inconsistent in the rigor with which contract monitoring occurred.
* In that same month, we reported that DOD needed to improve its
management and oversight of undefinitized contract actions (UCAs),
under which DOD can authorize contractors to begin work and incur costs
before reaching a final agreement on contract terms and conditions,
including price.[Footnote 14] The contractor has little incentive to
control costs during this period, creating a potential for wasted
taxpayer dollars. We found that DOD did not know the full extent it
used UCAs because the government's federal procurement data system did
not track UCAs awarded under certain contract actions, such as task or
delivery order contracts. Moreover, we found that (1) the use of some
UCAs could have been avoided with better acquisition planning; (2) DOD
frequently did not definitize the UCAs within the required time frames
thereby increasing the cost risk to the government; and (3) contracting
officers were not documenting the basis for the profit or fee
negotiated, as required. We called on DOD to strengthen management
controls and oversight of UCAs to reduce the risk of DOD paying
unnecessary costs and potentially excessive profit rates.
* In a separate report, issued in July 2007, we found that DOD's
failure to adhere to key contracting principles on a multibillion
dollar contract to restore Iraq's oil infrastructure increased the
government's risk.[Footnote 15] In this case, we found that the lack of
timely negotiations on task orders that were issued as UCAs contributed
significantly to DOD's decision to pay nearly all of the $221 million
in costs questioned by the Defense Contract Audit Agency (DCAA). All 10
task orders we reviewed were negotiated more than 180 days after the
work commenced, and the contractor had incurred almost all its costs at
the time of negotiations. The negotiation delays were in part caused by
changing requirements, funding challenges, and inadequate contractor
proposals.
Our previous work has also identified cost and oversight risks
associated with inconsistent or limited collection and distribution of
information. Examples include:
* Our 2008 review of several Army service contracts found that the
Army's oversight of some of the contracts was inadequate due in part to
contracting offices not maintaining complete contract files documenting
contract administration and oversight actions taken, in accordance with
DOD policy and guidance. As a result, incoming contract administration
personnel did not know whether the contractors were meeting their
contract requirements effectively and efficiently and therefore were
limited in their ability to make informed decisions related to award
fees, which can run into the millions of dollars.
* In addition, several GAO reports and testimonies have noted that
despite years of experience using contractors to support deployed
forces in the Balkans, Southwest Asia, Iraq, and Afghanistan, DOD has
made few efforts to systematically collect and share lessons learned
regarding the oversight and management of contractors supporting
deployed forces. As a result, many of the management and oversight
problems we identified in earlier operations have recurred in current
operations. Moreover, without the sharing of lessons learned,
substantial increases in forces in Afghanistan are likely to exacerbate
those contract management and oversight challenges already present in
Afghanistan.
Workforce Issues and Lack of Training Continue to Limit DOD's Ability
to Provide Adequate Contract Oversight and Management:
Properly managing the acquisition of services requires a workforce with
the right skills and capabilities. In that regard, there are a number
of individuals and organizations involved in the acquisition process,
including contracting officers who award contracts, as well as those
individuals who define requirements, receive or benefit from the
services provided, and oversee contractor performance, including DCAA
and the Defense Contract Management Agency (DCMA).
We and others have raised questions whether DOD has a sufficient number
of trained acquisition and contract oversight personnel to meet its
needs. For example, the increased volume of contracting is far in
excess of the growth in DOD contract personnel. Between fiscal years
2001 and 2008, DOD obligations on contracts when measured in real
terms, have more than doubled to over $387 billion in total, and to
more than $200 billion just for services. Over the same time period,
however, DOD reports its contracting career field grew by only about 1
percent as shown in figure 1. In 2008, DOD completed an assessment of
its contracting workforce, in which more than 87 percent of its
contracting workforce participated. DOD reports that this assessment
provides a foundation for understanding the skills and capabilities its
workforce currently and is in the process of determining how to close
those gaps, such as through training or hiring additional personnel.
DOD, however, lacks information on the competencies and skills needed
in its entire workforce, particularly those who provide oversight or
play other key roles in the acquisition process. We are currently
assessing DOD's ability to determine the sufficiency of its acquisition
workforce and its efforts to improve its workforce management and
oversight and will be issuing a report in the spring.
Figure 1: Changes in DOD's Contract Obligations and Contracting
Workforce Fiscal Year 2001 to Fiscal Year 2008.
[Refer to PDF for image]
This figure is a combination stacked vertical bar and lie graph
depicting the following data:
Dollars are constant fiscal year 2008 dollars (in billions):
Fiscal year: 2001;
Products: $80;
Services: $92.7;
Total: $172.7;
Contracting career field workforce: 25,400.
Fiscal year: 2002;
Products: $91.2;
Services: $108.3;
Total: $209.5;
Contracting career field workforce: 27,900.
Fiscal year: 2003;
Products: $103.5;
Services: $135.5;
Total: $239.0;
Contracting career field workforce: 27,000.
Fiscal year: 2004;
Products: $114.8;
Services: $141.9;
Total: $264.7;
Contracting career field workforce: 26,200.
Fiscal year: 2005;
Products: $132.1;
Services: $153.6;
Total: $285.7;
Contracting career field workforce: 26,000.
Fiscal year: 2006;
Products: $144.6;
Services: $159.4;
Total: $304.0;
Contracting career field workforce: 27,700.
Fiscal year: 2007;
Products: $160.4;
Services: $174.4;
Total: $334.8;
Contracting career field workforce: 26,000.
Fiscal year: 2008;
Products: $186.8;
Services: $200.9;
Total: $387.7;
Contracting career field workforce: 25,700.
Source: GAO analysis; Federal Procurement Data System-Next Generation,
DOD.
[End of figure]
Having too few contract oversight personnel presents unique
difficulties at deployed locations given the more demanding operational
environment compared to the United States because of an increased
operational tempo, security considerations, and other factors. We and
others have found significant deficiencies in DOD's oversight of
contractors because of an inadequate number of trained personnel to
carry out these duties. Examples include:
* We noted in January and September 2008 that the lack of qualified
personnel hindered oversight of contracts to maintain military
equipment in Kuwait and provide linguist services in Iraq and
Afghanistan.[Footnote 16] We found that without adequate levels of
qualified oversight personnel, DOD's ability to perform the various
tasks needed to monitor contractor performance may be hindered. For
example, we found that poor contractor performance can result in the
warfighter not receiving equipment in a timely manner.
* In addition, the Army Inspector General reported in October 2007 that
shortages of contracting officers, quality assurance personnel, and
technically proficient contracting officer's representatives were
noticeable at all levels, while the 2007 Commission on Army Acquisition
and Program Management in Expeditionary Operations (the Gansler
Commission) noted that shortages in personnel contributed to fraud,
waste, and abuse in theatre.[Footnote 17] If left unaddressed, the
problems posed by personnel shortages in Iraq and elsewhere are likely
to become more significant in Afghanistan as we increase the number of
forces and the contractors who support them there.
An additional, long-standing challenge hindering management and
oversight of contractors supporting deployed forces is the lack of
training for military commanders and oversight personnel. As we
testified in 2008, 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, such as being unable to adequately
plan for the use of those contractors and confusion regarding the
military commanders' roles and responsibilities in managing and
overseeing contractors.[Footnote 18] Lack of training also affects the
ability of contract oversight personnel to perform their duties. The
customer (e.g., a military unit) for contractor-provided services at
deployed locations is responsible for evaluating the contractor's
performance and ensuring that contractor-provided services are used in
an economical and efficient manner. Often this involves the use of
contracting officer's representatives--individuals typically drawn from
units receiving contractor-provided services, who are not normally
contracting specialists, and for whom contract monitoring is an
additional duty. We have repeatedly found that contract oversight
personnel received little or no pre-deployment training on their roles
and responsibilities in monitoring contractor performance, hindering
the ability of those individuals to effectively manage and oversee
contractors.
While performing oversight is often the responsibility of military
service contracting officers or their representatives, DCAA and DCMA
play key roles in the oversight process. DCAA provides a critical
internal control function on behalf of DOD and other federal agencies
by performing a range of contract audit services, including reviewing
contractors' cost accounting systems, conducting audits of contractor
cost proposals and payment invoices, and providing contract advisory
services in an effort to help assure that the government pays fair and
reasonable prices. To be an effective control, DCAA must perform
reliable audits. In a report we issued in July 2008, however, we
identified a serious noncompliance with generally accepted government
auditing standards at three field audit offices responsible for
billions of dollars of contracting.[Footnote 19] For example, we found
that workpapers did not support reported opinions and sufficient audit
work was not performed to support audit opinions and conclusions. As a
result, DCAA cannot assure that these audits provided reliable
information to support sound contract management business decisions or
that contract payments are not vulnerable to significant amounts of
fraud, waste, abuse, and mismanagement. The DCAA Director subsequently
acknowledged agencywide problems and initiated a number of corrective
actions. In addition, DOD included DCAA's failure to meet professional
standards as a material internal control weakness in its fiscal year
2008 agency financial report.[Footnote 20] We are currently assessing
DCAA's corrective actions and anticipate issuing a report later this
spring.
Similarly, DCMA provides oversight at more than 900 contractor
facilities in the United States and across the world, providing
contract administration services such as monitoring contractors'
performance and management systems to ensure that cost, performance,
and delivery schedules comply with the terms and conditions of the
contracts. DCMA has also assumed additional responsibility for
overseeing service contracts in Iraq, Afghanistan, and other deployed
locations, including contracts that provide logistical support and
private security services. In a July 2008 report, we noted that DCMA
had increased staffing in these locations only by shifting resources
from other locations and had asked the services to provide additional
staff since DCMA did not have the resources to meet the requirement.
[Footnote 21] As a result, it is uncertain whether DCMA has the
resources to meet its commitments at home and abroad.
DOD Has Taken Some Steps to Address Service Contract Management and
Oversight Challenges in Response to GAO Recommendations:
GAO's body of work on contract management and the use of contractors to
support deployed forces has resulted in numerous recommendations over
the last several years. In response, DOD has issued guidance to address
contracting weaknesses and promote the use of sound business
arrangements. For example, in response to congressional direction and
GAO recommendations, DOD has established a framework for reviewing
major services acquisitions; promulgated regulations to better manage
its use of contracting arrangements that can pose additional risks for
the government, including time-and-materials contracts and
undefinitized contracting actions; and has efforts under way to
identify and improve the skills and capabilities of its workforce. For
example, in response to recommendations from the Gansler Commission,
the Army has proposed increasing its acquisition workforce by over
2,000 personnel. However, the Army also acknowledged that this process
will take at least 3 to 5 years to complete.
DOD has also taken specific steps to address contingency contracting
issues. GAO has made numerous recommendations over the past 10 years
aimed at improving DOD's management and oversight of contractors
supporting deployed forces, including the need for (1) DOD-wide
guidance on how to manage contractors that support deployed forces, (2)
improved training for military commanders and contract oversight
personnel, and (3) a focal point within DOD dedicated to leading DOD's
efforts to improve the management and oversight of contractors
supporting deployed forces. As we reported in November 2008, DOD has
been developing, revising, and finalizing new joint policies and
guidance on the department's use of contractors to support deployed
forces (which DOD now refers to as operational contract support).
[Footnote 22] Examples include:
* In October 2008, DOD finalized Joint Publication 4-10, "Operational
Contract Support," which establishes doctrine and provides standardized
guidance for planning, conducting, and assessing operational contract
support integration and contractor management functions in support of
joint operations.
* DOD is revising DOD Instruction 3020.41, "Program Management for the
Preparation and Execution of Acquisitions for Contingency Operations,"
which strengthens the department's joint policies and guidance on
program management, including the oversight of contractor personnel
supporting a contingency operation.
DOD has also taken steps to improve the training of military commanders
and contract oversight personnel. As we reported in November 2008, the
Deputy Secretary of Defense issued a policy memorandum in August 2008
directing the appointment of trained contracting officer's
representatives prior to the award of contracts.[Footnote 23] U.S.
Joint Forces Command is developing two training programs for non-
acquisition personnel to provide information necessary to operate
effectively on contingency contracting matters and work with
contractors on the battlefield. In addition, the Army has a number of
training programs available that provide information on contract
management and oversight to operational field commanders and their
staffs. The Army is also providing similar training to units as they
prepare to deploy, and DOD, the Army, and the Marine Corps have begun
to incorporate contractors and contract operations in mission rehearsal
exercises.
In October 2006, the Deputy Under Secretary of Defense for Logistics
and Materiel Readiness established the office of the Assistant Deputy
Under Secretary of Defense (Program Support) to act as the focal point
for DOD's efforts to improve the management and oversight of
contractors supporting deployed forces. This office has taken several
steps to help formalize and coordinate efforts to address issues
related to contractor support to deployed forces. For example, the
office took a leading role in establishing a community of practice for
operational contract support--comprising subject matter experts from
the Office of the Secretary of Defense, the Joint Staff, and the
services--that may be called upon to work on a specific task or
project. Additionally, the office helped establish a Council of
Colonels, which serves as a "gatekeeper" for initiatives, issues, or
concepts, as well as a Joint Policy Development General Officer
Steering Committee, which includes senior commissioned officers or
civilians designated by the services. The committee's objective is to
guide the development of the Office of the Secretary of Defense, Joint
Staff, and service policy, doctrine, and procedures to adequately
reflect situational and legislative changes as they occur within
operational contract support.
Concluding Observations:
DOD has recognized it faces challenges with weapons systems acquisition
and contract management and the department has taken steps to address
these challenges, including those outlined in this testimony. The
current economic crisis presents an opportunity and an imperative for
DOD to act forcefully to implement new procedures and processes in a
sustained, consistent, and effective manner across the department. In
this context, to overcome these issues, the department needs to take
additional actions. These include:
* In the near-term, DOD needs to ensure that existing and future
guidance is fully complied with and implemented. Doing so will require
continued, sustained commitment by senior DOD leadership to translate
policy into practice and to hold decision makers accountable.
* At the same time, the department and its components have taken or
plan to take actions to further address weapons systems acquisition and
contract management challenges. However, many of these actions, such as
the Army's efforts to increase its acquisition workforce, will not be
fully implemented for several years and progress will need to be
closely monitored to ensure the steps undertaken result in their
intended outcomes.
* Risk is inherent when relying on contractors to support DOD missions.
At the departmentwide level, DOD has yet to conduct the type of
fundamental reexamination of its reliance on contractors that we called
for in 2008.[Footnote 24] Without understanding the depth and breadth
of contractor support, the department will be unable to determine if it
has the appropriate mix of military personnel, DOD civilians, and
contractors. As a result, DOD may not be totally aware of the risks it
faces and will therefore be unable to mitigate those risks in the most
cost-effective and efficient manner.
The implementation of existing and emerging policy, monitoring of the
department's actions, and the comprehensive assessment of what should
and should not be contracted for are not easy tasks, but they are
essential if DOD is to place itself in a better position to deliver
goods and services to the warfighters. Moreover, with an expected
increase of forces in Afghanistan, the urgency for action is heightened
to help the department avoid the same risks of fraud, waste, and abuse
it has experienced using contractors in support of Operation Iraqi
Freedom.
Mr. Chairman, this concludes my prepared statement. I will be pleased
to answer any questions you or members of the subcommittee may have at
this time.
Contacts and Acknowledgments:
For further information about this testimony, please contact Janet St.
Laurent, Managing Director, Defense Capabilities and Management on
(202) 512-4402 or stlaurentj@gao.gov or Katherine V. Schinasi, Managing
Director, Acquisition and Sourcing Management on (202) 512-4841 or
schinasik@gao.gov. Other key contributors to this testimony include
Carole Coffey, Grace Coleman, Timothy DiNapoli, Angie Nichols-Friedman,
Gayle Fischer, John Hutton, Julia Kennon, James A. Reynolds, William M.
Solis, and Karen Thornton.
[End of section]
Appendix I: GAO's 2009 High-Risk List:
Addressing Challenges in Broad-Based Transformations:
* Modernizing the Outdated U.S. Financial Regulatory System (New):
* Protecting Public Health through Enhanced Oversight of Medical
Products (New):
* Transforming EPA's Processes for Assessing and Controlling Toxic
Chemicals (New):
* 2010 Census (New in March 2008):
* Strategic Human Capital Management:
* Managing Federal Real Property:
* Protecting the Federal Government's Information Systems and the
Nation's Critical Infrastructures:
* Implementing and Transforming the Department of Homeland Security:
* Establishing Effective Mechanisms for Sharing Terrorism-Related
Information to Protect the Homeland:
* DOD Approach to Business Transformation:
- Business Systems Modernization:
- Personnel Security Clearance Program:
- Support Infrastructure Management:
- Financial Management:
- Supply Chain Management:
- Weapon Systems Acquisition:
* Funding the Nation's Surface Transportation System:
* Ensuring the Effective Protection of Technologies Critical to U.S.
National Security Interests:
* Revamping Federal Oversight of Food Safety:
Managing Federal Contracting More Effectively:
* DOD Contract Management:
* DOE's Contract Management for the National Nuclear Security
Administration and Office of Environmental Management:
* NASA Acquisition Management:
* Management of Interagency Contracting:
Assessing the Efficiency and Effectiveness of Tax Law Administration:
* Enforcement of Tax Laws:
* IRS Business Systems Modernization:
Modernizing and Safeguarding Insurance and Benefit Programs:
* Improving and Modernizing Federal Disability Programs:
* Pension Benefit Guaranty Corporation Insurance Programs:
* Medicare Program:
* Medicaid Program:
* National Flood Insurance Program:
[End of section]
Appendix II: Selected GAO Products:
High-Risk Series:
High-Risk Series: An Update. [hyperlink,
http://www.gao.gov/products/GAO-09-271]. Washington, D.C.: January
2009.
Weapon Systems:
Defense Acquisitions: Fundamental Changes Are Needed to Improve Weapon
Program Outcomes. [hyperlink,
http://www.gao.gov/products/GAO-08-1159T]. Washington, D.C.: September
25, 2008.
Defense Acquisitions: Assessments of Selected Weapon Programs.
[hyperlink, http://www.gao.gov/products/GAO-08-467SP]. Washington,
D.C.: March 31, 2008.
Best Practices:
Defense Acquisitions: A Knowledge-Based Funding Approach Could Improve
Major Weapon System Program Outcomes. [hyperlink,
http://www.gao.gov/products/GAO-08-619]. Washington, D.C.: July 2,
2008.
Best Practices: Increased Focus on Requirements and Oversight Needed to
Improve DOD's Acquisition Environment and Weapon System Quality.
[hyperlink, http://www.gao.gov/products/GAO-08-294]. Washington, D.C.:
February 1, 2008.
Space Acquisitions: Actions Needed to Expand and Sustain Use of Best
Practices. [hyperlink, http://www.gao.gov/products/GAO-07-730T].
Washington, D.C.: April 19, 2007.
Investment Strategy:
Defense Acquisitions: DOD's Requirements Determination Process Has Not
Been Effective in Prioritizing Joint Capabilities. [hyperlink,
http://www.gao.gov/products/GAO-08-1060]. Washington, D.C.: September
25, 2008.
Tactical Aircraft: DOD Needs a Joint and Integrated Investment
Strategy. [hyperlink, http://www.gao.gov/products/GAO-07-415].
Washington, D.C.: April 2, 2007.
Best Practices: An Integrated Portfolio Management Approach to Weapon
System Investments Could Improve DOD's Acquisition Outcomes.
[hyperlink, http://www.gao.gov/products/GAO-07-388]. Washington, D.C.:
March 30, 2007.
Weapon System Reviews:
Defense Acquisitions: Cost to Deliver Zumwalt-Class Destroyers Likely
to Exceed Budget. [hyperlink, http://www.gao.gov/products/GAO-08-804].
Washington, D.C.: July 31, 2008.
Defense Acquisitions: Progress Made in Fielding Missile Defense, but
Program Is Short of Meeting Goals. [hyperlink,
http://www.gao.gov/products/GAO-08-448]. Washington, D.C.: March 14,
2008.
Joint Strike Fighter: Recent Decisions by DOD Add to Program Risks.
[hyperlink, http://www.gao.gov/products/GAO-08-388]. Washington, D.C.:
March 11, 2008.
Defense Acquisitions: 2009 Is a Critical Juncture for the Army's Future
Combat System. [hyperlink, http://www.gao.gov/products/GAO-08-408].
Washington, D.C.: March 7, 2008.
Contract Management:
DCAA Audits: Allegations That Certain Audits at Three Locations Did Not
Meet Professional Standards Were Substantiated. [hyperlink,
http://www.gao.gov/products/GAO-08-857]. Washington, D.C.: July 22,
2008.
Defense Contracting: Post-Government Employment of Former DOD Officials
Needs Greater Transparency. [hyperlink,
http://www.gao.gov/products/GAO-08-485]. Washington, D.C.: May 21,
2008.
Defense Contracting: Army Case Study Delineates Concerns with Use of
Contractors as Contract Specialists. [hyperlink,
http://www.gao.gov/products/GAO-08-360]. Washington, D.C.: March 26,
2008.
Defense Contracting: Additional Personal Conflict of Interest
Safeguards Needed for Certain DOD Contractor Employees. [hyperlink,
http://www.gao.gov/products/GAO-08-169]. Washington, D.C.: March 7,
2008.
Defense Contract Management: DOD's Lack of Adherence to Key Contracting
Principles on Iraq Oil Contract Put Government Interests at Risk.
[hyperlink, http://www.gao.gov/products/GAO-07-839]. Washington, D.C.:
July 31, 2007.
Defense Contracting: Improved Insight and Controls Needed over DOD's
Time-and-Materials Contracts. [hyperlink,
http://www.gao.gov/products/GAO-07-273]. Washington, D.C.: June 29,
2007.
Defense Contracting: Use of Undefinitized Contract Actions Understated
and Definitization Time Frames Often Not Met. [hyperlink,
http://www.gao.gov/products/GAO-07-559]. Washington, D.C.: June 19,
2007.
Defense Acquisitions: Improved Management and Oversight Needed to
Better Control DOD's Acquisition of Services. [hyperlink,
http://www.gao.gov/products/GAO-07-832T, Washington, D.C.: May 10,
2007:
Defense Acquisitions: Tailored Approach Needed to Improve Service
Acquisition Outcomes. [hyperlink,
http://www.gao.gov/products/GAO-07-20]. Washington, D.C.: November 9,
2006.
Operational Contract Support:
Contract Management: DOD Developed Draft Guidance for Operational
Contract Support but Has Not Met All Legislative Requirements.
[hyperlink, http://www.gao.gov/products/GAO-09-114R]. Washington, D.C.:
November 20, 2008.
Contingency Contracting: DOD, State, and USAID Contracts and Contractor
Personnel in Iraq and Afghanistan. [hyperlink,
http://www.gao.gov/products/GAO-09-19]. Washington, D.C.: October 1,
2008.
Military Operations: DOD Needs to Address Contract Oversight and
Quality Assurance Issues for Contracts Used to Support Contingency
Operations. [hyperlink, http://www.gao.gov/products/GAO-08-1087].
Washington, D.C: September 26, 2008.
Rebuilding Iraq: DOD and State Department Have Improved Oversight and
Coordination of Private Security Contractors in Iraq, but Further
Actions Are Needed to Sustain Improvements. [hyperlink,
http://www.gao.gov/products/GAO-08-966]. Washington, D.C.: July 31,
2008.
Defense Management: DOD Needs to Reexamine Its Extensive Reliance on
Contractors and Continue to Improve Management and Oversight.
[hyperlink, http://www.gao.gov/products/GAO-08-572T]. Washington, D.C.:
March 11, 2008.
Military Operations: Implementation of Existing Guidance and Other
Actions Needed to Improve DOD's Oversight and Management of Contractors
in Future Operations. [hyperlink,
http://www.gao.gov/products/GAO-08-436T]. Washington, D.C.: January 24,
2008.
Defense Acquisitions: DOD's Increased Reliance on Service Contractors
Exacerbates Longstanding Challenges. [hyperlink,
http://www.gao.gov/products/GAO-08-621T]. Washington, D.C.: January 23,
2008.
Defense Logistics: The Army Needs to Implement an Effective Management
and Oversight Plan for the Equipment Maintenance Contract in Kuwait.
[hyperlink, http://www.gao.gov/products/GAO-08-316R]. Washington, D.C.:
January 23, 2008.
Military Operations: High-Level DOD Action Needed to Address Long-
standing Problems with Management and Oversight of Contractors
Supporting Deployed Forces. [hyperlink,
http://www.gao.gov/products/GAO-07-145]. Washington, D.C.: December 18,
2006.
Rebuilding Iraq: Continued Progress Requires Overcoming Contract
Management Challenges. [hyperlink,
http://www.gao.gov/products/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.
[hyperlink, http://www.gao.gov/products/GAO-06-999R]. Washington, D.C.:
September 22, 2006.
Rebuilding Iraq: Actions Still Needed to Improve the Use of Private
Security Providers. [hyperlink,
http://www.gao.gov/products/GAO-06-865T]. Washington, D.C.: June 13,
2006.
Footnotes:
[1] GAO, High-Risk Series: An Update, [hyperlink,
http://www.gao.gov/products/GAO-09-271] (Washington, D.C.: January
2009). Appendix I provides a list of GAO's 2009 high-risk areas.
[2] GAO, Defense Acquisitions: Assessments of Selected Weapon Programs,
[hyperlink, http://www.gao.gov/products/GAO-08-467SP] (Washington,
D.C.: Mar. 31, 2008).
[3] DOD has three major processes involved in making weapon system
investment decisions, including the Joint Capabilities Integration and
Development System for identifying warfighting needs; the Planning,
Programming, Budgeting and Execution system, for allocating resources;
and the Defense Acquisition System for managing product development and
procurement.
[4] [hyperlink, http://www.gao.gov/products/GAO-08-467SP].
[5] Systems engineering translates customer needs into specific product
requirements for which requisite technological, software, engineering,
and production capabilities can be identified through requirements
analysis, design, and testing.
[6] GAO, Defense Acquisitions: Tailored Approach Needed to Improve
Service Acquisition Outcomes, [hyperlink,
http://www.gao.gov/products/GAO-07-20]. (Washington, D.C.: Nov. 9,
2006).
[7] GAO, Military Operations: Implementation of Existing Guidance and
Other Actions Needed to Improve DOD's Oversight and Management of
Contractors in Future Operations, [hyperlink,
http://www.gao.gov/products/GAO-08-436T] (Washington, D.C.: Jan. 24,
2008).
[8] GAO, Defense Contracting: Additional Personal Conflict of Interest
Safeguards Needed for Certain DOD Contractor Employees, [hyperlink,
http://www.gao.gov/products/GAO-08-169] (Washington, D.C.: Mar. 7,
2008).
[9] GAO, Defense Contracting: Army Case Study Delineates Concerns with
Use of Contractors as Contract Specialists, [hyperlink,
http://www.gao.gov/products/GAO-08-360] (Washington, D.C.: Mar. 26,
2008).
[10] GAO, Space Acquisitions: DOD Needs to Take More Action to Address
Unrealistic Initial Cost Estimates of Space Systems, [hyperlink,
http://www.gao.gov/products/GAO-07-96] (Washington, D.C.: Nov. 17,
2006).
[11] GAO, Military Operations: DOD Needs to Address Contract Oversight
and Quality Assurance Issues for Contracts Used to Support Contingency
Operations, [hyperlink, http://www.gao.gov/products/GAO-08-1087]
(Washington, D.C: Sept. 26, 2008).
[12] GAO, Defense Budget: Trends in Operation and Maintenance Costs and
Support Services Contracting, [hyperlink,
http://www.gao.gov/products/GAO-07-631] (Washington, D.C.: May 18,
2007).
[13] GAO, Defense Contracting: Improved Insight and Controls Needed
over DOD's Time-and-Materials Contracts, [hyperlink,
http://www.gao.gov/products/GAO-07-273] (Washington, D.C.: June 29,
2007).
[14] GAO, Defense Contracting: Use of Undefinitized Contract Actions
Understated and Definitization Time Frames Often Not Met, [hyperlink,
http://www.gao.gov/products/GAO-07-559] (Washington, D.C.: June 19,
2007).
[15] GAO, Defense Contract Management: DOD's Lack of Adherence to Key
Contracting Principles on Iraq Oil Contract Put Government Interests at
Risk, [hyperlink, http://www.gao.gov/products/GAO-07-839] (Washington,
D.C.: July 31, 2007).
[16] [hyperlink, http://www.gao.gov/products/GAO-08-1087] and GAO,
Defense Logistics: The Army Needs to Implement an Effective Management
and Oversight Plan for the Equipment Maintenance Contract in Kuwait,
[hyperlink, http://www.gao.gov/products/GAO-08-316R] (Washington, D.C:
Jan. 22, 2008).
[17] Commission on Army Acquisition and Program Management in
Expeditionary Operations, Urgent Reform Required: Army Expeditionary
Contracting (Oct. 31, 2007).
[18] [hyperlink, http://www.gao.gov/products/GAO-08-436T].
[19] GAO, DCAA Audits: Allegations That Certain Audits at Three
Locations Did Not Meet Professional Standards Were Substantiated,
[hyperlink, http://www.gao.gov/products/GAO-08-857] (Washington, D.C.:
July 22, 2008).
[20] DOD, Fiscal Year 2008 Agency Financial Report, Department of
Defense (Washington, D.C.: Nov. 17, 2008).
[21] GAO, Rebuilding Iraq: DOD and State Department Have Improved
Oversight and Coordination of Private Security Contractors in Iraq, but
Further Actions Are Needed to Sustain Improvements, [hyperlink,
http://www.gao.gov/products/GAO-08-966] (Washington, D.C.: July 31,
2008).
[22] GAO, Contract Management: DOD Developed Draft Guidance for
Operational Contract Support but Has Not Met All Legislative
Requirements, [hyperlink, http://www.gao.gov/products/GAO-09-114R]
(Washington, D.C.: Nov. 20, 2008).
[23] [hyperlink, http://www.gao.gov/products/GAO-09-114R].
[24] GAO, Defense Management: DOD Needs to Reexamine Its Extensive
Reliance on Contractors and Continue to Improve Management and
Oversight, [hyperlink, http://www.gao.gov/products/GAO-08-572T]
(Washington, D.C.: Mar. 11, 2008).
[End of section]
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