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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: 

Todayís 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. DODís 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 DODís 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 programsóundermining 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 DODís 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. GAOís 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 GAOís recommendations aimed at improving management and oversight of contractors. These include issuing policy and guidance addressing contract management, identifying skill gaps in DODís 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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