Key Issues > DOD Contract Management - High Risk Issue

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DOD Contract Management - High Risk Issue

The Department of Defense (DOD) is the largest contracting agency in the federal government. In fiscal year 2018, it accounted for almost two-thirds of all federal contracts. But the department needs to improve how it tracks, manages, and budgets for its contracted services. GAO added DOD's Contract Management to its High-Risk List in 1992 and has identified three major areas of challenges—the acquisition workforce, service acquisitions, and operational contract support.

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DOD spent over $350 billion in fiscal year 2018 on contracts for goods and services like:

Major weapon systems, such as aircraft, ships, and guided missiles.
Health care.
Professional support, such as engineering and other technological expertise.
Fuel.

Federal Contracting Obligations by Agency, Fiscal Year 2018 (dollars in billions)

DOD also uses contractors to support military operations, such as those in Afghanistan. Contractors provide services including translation, logistics, maintenance, and communications.

However, DOD faces a number of challenges with how it manages its federal contracts.

DOD reduced the size of its acquisition workforce in the mid-1990s as defense budgets decreased. However, due to concerns about a lack of necessary skills in DOD employees and a growing reliance on contractors, DOD has been rebuilding its acquisition workforce since 2009. A skilled acquisition workforce is vital to maintaining military readiness, increasing DOD’s buying power, and achieving savings.
DOD has a fragmented and uncoordinated approach to acquiring services through contracts. For example, the department has limited information on what it plans to spend on specific types of contracted services in its budget forecasts, as well as difficulties in clearly defining contract requirements.
DOD has spent billions of dollars on contractors worldwide to support military activities. However, the department has faced difficulties in identifying capability gaps, developing guidance, and integrating contractor support into its operational plans and training.

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DOD Contracted Services: Long-Standing Issues Remain about Using Inventory for Management Decisions

GAO-18-330: Published: Mar 29, 2018. Publicly Released: Mar 29, 2018.

DOD spends billions of dollars on contracted services for tasks such as IT support, but it has struggled for years to effectively manage the range of services DOD buys. To build a full picture of purchases and make strategic decisions about them, it's required to compile an ongoing inventory of these purchases. We found that DOD continues to make limited use of the inventory. We have made 18 reco...

Defense Acquisition Workforce: Opportunities Exist to Improve Practices for Developing Program Managers

GAO-18-217: Published: Feb 15, 2018. Publicly Released: Feb 15, 2018.

Cost and schedule overruns have plagued DOD’s major defense acquisition programs, with current projected costs exceeding initial expectations by $484 billion and delays averaging 31 months. To keep programs on track, DOD relies on program managers who can balance factors that influence cost, schedule, and performance. The military services have taken steps to develop top-notch talent for this r...

Defense Contracted Services: DOD Needs to Reassess Key Leadership Roles and Clarify Policies for Requirements Review Boards

GAO-17-482: Published: Aug 31, 2017. Publicly Released: Aug 31, 2017.

In fiscal year 2016, DOD spent about $150 billion on service contracts—about half of its total contract spending—covering services such as program management, engineering, and IT support. As part of DOD's latest effort to better manage service contracts, DOD established new leadership roles for service acquisitions throughout the agency. However, we found that officials in these new positions...

PODCAST: Reforming Defense Contractor Services

Operational Contract Support: Actions Needed to Enhance Capabilities in the Pacific Region

GAO-17-428: Published: Jun 23, 2017. Publicly Released: Jun 23, 2017.

U.S. Pacific Command (PACOM) does not fully account for contractor personnel in a steady-state, or peacetime, environment and lacks a process to vet foreign vendors. Department of Defense (DOD) guidance requires the accounting of certain contractor personnel during contingency operations, but is unclear for steady-state environments. PACOM issued limited guidance in November 2016 to address accoun...

Defense Acquisition Workforce: DOD Has Opportunities to Further Enhance Use and Management of Development Fund

GAO-17-332: Published: Mar 28, 2017. Publicly Released: Mar 28, 2017.

Since 2008, DOD has obligated over $3.5 billion through a dedicated fund to help recruit and train its acquisition workforce—the people responsible for buying $250 billion in goods and services each year. We previously reported that delays in using this fund have led to large amounts of money being carried over from year to year. We found that DOD, with some help from Congress, improved the tim...

DOD Inventory of Contracted Services: Timely Decisions and Further Actions Needed to Address Long-Standing Issues

GAO-17-17: Published: Oct 31, 2016. Publicly Released: Oct 31, 2016.

DOD spent around $150 billion last year on contracts for services provided by engineers, researchers, technicians, landscapers and janitors, to name a few. So DOD should know exactly how many service contractors it has and exactly what they do—information that is crucial for making workforce and budget decisions. Congress requires DOD to compile and review an annual inventory of its service con...