DOD Contract Management

Why It's High Risk

The Department of Defense (DOD) obligated $372 billion on contracts for goods and services in fiscal year 2009. At times, however, the lack of well-defined requirements, the use of ill-suited business arrangements, and the lack of an adequate number of trained acquisition and contract oversight personnel contribute to unmet expectations and place the department at risk of paying more than necessary.

^ Back to topWhat We Found

DOD relies heavily on contractors to provide services to help meet critical needs, but its approach to managing services acquisitions traditionally has not been strategically oriented. For example, DOD’s reliance on contractors is not yet fully guided by either 1) a systematic determination of which functions and activities should be contracted out and which should be performed by civilian employees or military personnel; or 2) an assessment of the risks that reliance on contractors may pose.

Improved DOD guidance, initiation and use of independent management reviews, and other steps to promote the use of sound business arrangements have begun to address prior weaknesses in the department’s management and use of undefinitized contract actions, time-and-materials contracts, and award fees. Over the past 2 years, however, GAO reported that DOD had missed several opportunities to promote competition. In response, DOD leadership in 2010 has identified steps to promote more effective competition in its acquisitions.

Properly managing the acquisition of goods and services requires a workforce with the right skills and capabilities. In support of the Secretary of Defense’s strategy to resize and rebalance the acquisition workforce, DOD in April 2010 issued an acquisition workforce plan that:

• identified planned workforce growth
• specified recruitment and retention goals, and
• forecasted workforce-wide attrition and retirement trends.

While this was a positive step, GAO reported in September 2010 that DOD had not yet fully addressed the desired mix of civilian, military and contractor personnel or completed its assessment of the critical skills and competencies of DOD’s acquisition workforce.

DOD contracting challenges that were evident in Iraq and Afghanistan include:

• planning for the use of contractors in military operations
• vetting contractor personnel who provide security, and
• training nonacquisition personnel on the use and management of contractors in contingencies.

For example, in July 2009, GAO reported that DOD faced challenges when vetting its foreign security contractors because it had not developed procedures for vetting these personnel. Similarly, although DOD guidance calls for combatant commanders to include operational contract support requirements in their operation plans, GAO reported in March 2010 that few plans included this information. In June 2010, GAO reported that a cultural change emphasizing an awareness of operational contract support throughout DOD is needed to address these challenges.

^ Back to topWhat Needs to Be Done

To improve outcomes on the billions of dollars spent annually on goods and services, sustained DOD leadership and commitment is needed to ensure that policies are consistently put into practice. Further, DOD needs to

• take steps to strategically manage services acquisition, including defining and measuring against desired outcomes, and developing the data needed to do so;
• determine the appropriate mix, roles, and responsibilities of contractors, federal civilian, and military personnel;
• assess the effectiveness of efforts to improve competition and address prior weaknesses with specific contracting arrangements and incentives;
• ensure that its acquisition workforce is adequately sized, trained, and equipped to meet the department’s needs; and
• fully integrate operational contract support throughout the department through education and pre-deployment training.

DOD has generally agreed with GAO’s recommendations and has efforts under way to implement them.

^ Back to topKey Reports

Iraq and Afghanistan

Human Capital

Federal Contracting

Warfighter Support

Contingency Contracting

Warfighter Support

Defense Acquisitions

Defense Contracting

Defense Acquisitions

Defense Acquisitions

Contract Management

Contingency Contract Management

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