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DOD Contract Management

This information appears as published in the 2017 High Risk Report.

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The Department of Defense (DOD) obligated $273.5 billion in fiscal year 2015 on contracts for goods and services, including major weapon systems, support for military bases, information technology, consulting services, and commercial items. Contracts also include those supporting contingency operations, such as those in Afghanistan. DOD is, by far, the single largest contracting agency in the federal government, typically accounting for about two-thirds of all federal contracting activity. Our work and that of others, however, has identified challenges DOD faces within three segments of contract management: (1) the acquisition workforce, (2) service acquisitions, and (3) operational contract support (OCS). Ensuring DOD has the people, skills, capacities, tools, and data needed to make informed acquisition decisions is essential if DOD is to effectively and efficiently carry out its mission in an era of more constrained resources. We added this area to our High-Risk List in 1992.

DOD Contract Management

Senior DOD leadership remains committed to addressing its contract management challenges and, in particular, has made significant progress in addressing OCS issues since 2015. For example, DOD held meetings of its senior executive level governance forum to institutionalize OCS, issued revised guidance, and made progress in incorporating OCS concepts into operational plans. Further, DOD has taken steps to address education and training shortfalls and has dedicated additional training resources to enhance OCS. DOD also updated its action plan for OCS, which includes both revised and new tasks with measurable metrics and milestones. As a result of these actions, for the OCS subarea, we have raised our assessments for capacity to partially met and consider DOD to have met our criterion for having an action plan.

DOD has also made some progress in managing its acquisition workforce. Specifically, in October 2016, DOD issued its updated acquisition workforce strategic plan which, among other things, assessed the current capability of the workforce and identified risks that DOD needed to manage to meet future needs. As a result of these actions, we have raised the action plan criterion for the acquisition workforce subarea to partially met. DOD acknowledged, however, that it will need to develop and implement metrics to track progress toward meeting the four strategic goals identified in its October 2016 strategic workforce plan. Further, the workforce plan does not establish specific career field goals or targets, which will hinder efforts to ensure DOD has the right people with the right skills to meet future needs.

Congress has also taken action to help improve the acquisition workforce. In the National Defense Authorization Act for Fiscal Year 2016, Congress made permanent the requirement for the military departments and defense agencies to remit $500 million for each fiscal year to the Defense Acquisition Workforce Development Fund (DAWDF)—a fund used by DOD to increase hiring and provide additional training. This enabled critical support for acquisition workforce development initiatives for DOD.

While DOD continues to take action to improve how it manages services acquisitions, demonstrated progress was more limited. In January 2016, DOD issued a new instruction for service acquisitions that provides a management structure for acquiring services and identifies the roles and responsibilities of key leadership positions, but DOD still lacks an action plan that will enable it to assess progress toward achieving its goals, and efforts to identify goals and associated metrics are still in the early stages of development.

One critical element in improving services acquisition is to know what the department is buying today and what it intends to buy in the future. We found that while data on future service acquisitions are generally maintained by DOD program offices, DOD and military department guidance does not require that data to be specifically identified in DOD’s budget forecasts. In that regard, DOD’s January 2016 service acquisition instruction includes requirements to generate data on anticipated future service acquisition spending, but this requirement does not clearly identify what level of detail should be collected, leaving DOD at risk of developing inconsistent data between each military department.

Additional Details on What GAO Found are in the full report.

To further improve outcomes on the billions of dollars spent annually on goods and services, DOD needs to take the following actions.

  • Continue efforts, including strategic planning and aligning funding, to increase the department’s capacity to negotiate, manage, and oversee contracts by ensuring that its acquisition workforce is appropriately sized and trained to meet the department’s needs.
  • Determine the appropriate mix of military, civilian, and contractor personnel. To assist with this, DOD needs to make decisions about the department’s approach for compiling its inventory of contracted services and defining the roles and responsibilities of those involved with the inventory.
  • Strategically manage how it acquires services by defining desired outcomes, establishing goals and measures, and obtaining data needed to measure progress. To enhance available information on service acquisitions, the military departments should revise programming guidance to collect information on how contracted services will be used to meet requirements beyond the budget year.
  • Sustain efforts throughout the department to integrate OCS through policy, planning, training, and application of necessary resources for both current and future contingency operations.

Listed below are additional recommendations that need to be addressed:

  • In December 2015, we recommended that DOD update its acquisition workforce plan, including revising career field goals. DOD concurred with our recommendation. In October 2016, DOD issued an updated acquisition workforce strategic plan which, among other things, assessed the current capacity and capability of the workforce and identified the risks that DOD needed to manage to meet future needs. The updated workforce plan also established four strategic goals, approved by the Defense Acquisition Workforce Senior Steering Board, to guide future efforts, including shaping the acquisition workforce to achieve current and future acquisition requirements. The October 2016 plan did not, however, establish specific career field goals or targets for its 13 career fields, including priority career fields where it has not met its targets, such as contracting, business, and auditing, which will hinder efforts to ensure that DOD has the right people with the right skills to meet future needs.
  • In June 2013, we recommended that DOD identify baseline data on the status of service acquisitions, develop specific goals associated with their actions to improve service acquisitions, and establish metrics to assess progress in meeting these goals. DOD concurred with our recommendations and is developing service acquisition goals and metrics as well as an action plan for improving service acquisition.
  • In relation to strategic sourcing—a process of moving away from numerous individual procurements to a broader aggregate approach—in September 2012, we recommended that the department issue direction that sets goals for spending managed through strategic sourcing vehicles, establishes procedures for tracking strategic sourcing efforts, and establishes metrics to track progress toward these goals. We also recommended that DOD identify and evaluate the best way to strategically source DOD’s highest spending categories. DOD concurred with these two priority recommendations and has been working with the Office of Management and Budget’s Category Management Leadership Council to determine appropriate strategic sourcing goals, but specific goals and corresponding metrics have not yet been established. DOD officials stated that appointing senior officials to manage the acquisition of services should help DOD further expand strategic sourcing efforts for high-spend service categories. As of October 2016, however, many of these efforts are in the early stages of implementation.
  • We noted in our 2015 high-risk report that DOD’s top leadership has taken significant steps to plan and monitor progress in the management and oversight of contracting techniques and approaches. For example, we noted that DOD had been using its Business Senior Integration Group—the Under Secretary of Defense for Acquisition, Technology, and Logistics’ executive-level leadership forum for providing oversight in the planning, execution, and implementation of DOD’s Better Buying Power initiatives—as a mechanism to review ongoing and emerging issues, including competition. It is important for DOD to continuously promote competition, which is a critical tool for achieving the best possible return on investment for taxpayers.

In addition, congressional action is needed to enhance visibility into DOD’s planned spending on contract services. In February 2016, we found that, unlike DOD budget exhibits for weapon systems, DOD’s other budget exhibits which contain information on contracted services do not include data on projected spending beyond the current budget year. Without a roadmap of future projected service contract spending needs, Congress has limited visibility into an area that constitutes more than half of DOD’s annual contract spending. Given that the intent of section 235 of Title 10 United States Code was to provide both DOD and Congress with increased oversight of the procurement of services, we suggested that Congress should consider amending reporting requirements to include estimated spending on services beyond the budget year.

Looking for our recommendations? Click on any report to find each associated recommendation and its current implementation status.
  • portrait of Timothy J. DiNapoli
    • Timothy J. DiNapoli
    • Director, Acquisition and Sourcing Management
    • dinapolit@gao.gov
    • (202) 512-4841