Recommendation: The Secretary of Defense should adopt a proactive approach to managing service acquisition that leverages strategic and transactional elements. Specifically, the Secretary of Defense should ensure that requirements for individual service transactions are based on input from key stakeholders.

Agency Affected: Department of Defense

Status: Open

Comments: GAO will continue to monitor the Department of Defense's efforts on this recommendation. The Department agreed that a more coordinated, integrated, and strategic approach to managing service acquisitions was needed. The Director, Defense Procurement and Acquisition Policy, noted that DOD was developing an integrated assessment of how best to acquire services, and expected that this assessment would result in a comprehensive, departmentwide architecture. As part of this architecture, DOD intends to establish multi-functional support capabilities within the military departments that are intended to help users and contracting officers apply best practices, better define their requirements, and identify appropriate performance metrics, among other benefits. GAO reported in November 2009 that DOD faces challenges in defining requirements and outcome-based measures when acquiring professional and management services. DOD personnel generally expressed task order requirements in terms of a broad range of activities that contractors may perform, but used standards and measures that were not always well-suited to assess outcomes.

Recommendation: The Secretary of Defense should adopt a proactive approach to managing service acquisition that leverages strategic and transactional elements. Specifically, the Secretary of Defense should ensure that decisions on individual transactions are consistent with DOD's strategic goals and objectives.

Agency Affected: Department of Defense

Status: Open

Comments: GAO will continue to monitor DOD's efforts to address this recommendation. The Department agreed that a more coordinated, integrated, and strategic approach to managing service acquisitions was needed. The Director, Defense Procurement and Acquisition Policy, noted that DOD was developing an integrated assessment of how best to acquire services, and expected that this assessment would result in a comprehensive, departmentwide architecture. At this time, however, DOD has not established a normative position that provides the department's vision as to the volume and type of services that should be acquired in the future, and how such services will be managed from an enterprise-wide perspective. Further, discussions with DOD officials indicated that DOD is in the process of revising its strategic sourcing efforts as part of a broader reengineering effort. Over the past year, DOD has taken a number of steps to improve its insights on services acquisitions, such as by developing six services acquisitions portfolios to enhance strategic sourcing efforts; has created specific offices in each of the military departments to manage and oversee services acquisitions; and is collecting initial data for inclusion in DOD's fiscal year 2012 budget that will provide enhanced insights into future budget requirements for services. These steps, however, are in the early stages of implementation. Moreover, DOD has not yet established a normative position that provides the department's vision as to the volume and type of services that should be acquired in the future, and how such services will be managed from an enterprise-wide perspective.

Recommendation: The Secretary of Defense should adopt a proactive approach to managing service acquisition that leverages strategic and transactional elements. Specifically, the Secretary of Defense should on the basis of the above, clearly identify and communicate what service acquisition management improvements are necessary and the goals and timelines for completion.

Agency Affected: Department of Defense

Status: Open

Comments: The Department agreed that a more coordinated, integrated, and strategic approach to managing service acquisitions was needed. The Director, Defense Procurement and Acquisition Policy, noted that DOD was developing an integrated assessment of how best to acquire services, and expected that this assessment would result in a comprehensive, departmentwide architecture. Further, DOD officials indicated that they are concurrently revising its training curriculum to address service contracting issues; assessing the skills and capabilities of its acquisition workforce, and reengineering its approach to strategic sourcing. Additionally, DOD officials noted that the military departments and defense agencies are conducting self-assessments of their contract management processes in response to GAO's contract management high-risk issues. DOD officials indicated that, in combination, these efforts will form the basis for improving DOD's acquisition of services. In September 2008, DOD issued a memorandum intended to identify the extent to which the military departments were conducting annual post-award assessments of major service acquisitions, as required under DOD policy. GAO reported in January 2010 that DOD had not fully implemented a post-award review process as envisioned under the memorandum. Over the past year, DOD has created senior leadership positions in the Army and NAvy to provide enhanced management oversight of and visibility into services acquisitions, but the roles and responsibilities of these offices have not yet been clearly defined.

Recommendation: The Secretary of Defense should adopt a proactive approach to managing service acquisition that leverages strategic and transactional elements. Specifically, the Secretary of Defense should determine areas of specific risk that are inherent in acquiring services and that should be managed with greater attention (including those areas considered sensitive or undesirable in terms of quantity or performance).

Agency Affected: Department of Defense

Status: Open

Comments: The Department agreed that a more coordinated, integrated, and strategic approach to managing service acquisitions was needed. The Director, Defense Procurement and Acquisition Policy, noted that DOD was developing an integrated assessment of how best to acquire services, and expected that this assessment would result in a comprehensive, departmentwide architecture. At this time, however, DOD's services acquisition review process continue to use proposed dollar value as the principal proxy for risk, rather than determining the specific areas of risk that are inherent in services acquisition and that should be managed with greater attention. GAO reported in November 2009 that DOD policies do not require assessments of the risks associated with contractors closely supporting inherently governmental functions as part of its management reviews of acquisition strategies nor when task orders are issued for professional and management services. Such risks include the potential loss of government control over and accountability for mission-related policy and program decisions. DOD officials indicated the Office of Federal Procurement Policy (OFPP) is expected to issue revised policy on the definition of inherently governmental functions and services that closely support those functions. Once issued, DOD will provide supplemental guidance to its acquisition personnel. OFPP issued its guidance in September 2011, but DOD has not yet taken action.

Recommendation: The Secretary of Defense should adopt a proactive approach to managing service acquisition that leverages strategic and transactional elements. Specifically, the Secretary of Defense should establish a normative position of how and where service acquisition dollars are currently and will be spent (including volume, type, and trends).

Agency Affected: Department of Defense

Status: Open

Comments: DOD agreed that a more coordinated, integrated, and strategic approach to managing service acquisitions was needed. The Director, Defense Procurement and Acquisition Policy, noted that DOD was developing an integrated assessment of how best to acquire services, and expected that this assessment would result in a comprehensive, departmentwide architecture. Over the past year, DOD has taken a number of steps to improve its insights on services acquisitions, such as by developing six services acquisitions portfolios to enhance strategic sourcing efforts; has created specific offices in each of the military departments to manage and oversee services acquisitions; and is collecting initial data for inclusion in DOD's fiscal year 2012 budget that will provide enhanced insights into future budget requirements for services. These steps, however, are in the early stages of implementation. Moreover, DOD has not yet established a normative position that provides the department's vision as to the volume and type of services that should be acquired in the future, and how such services will be managed from an enterprise-wide perspective.

Recommendation: The Secretary of Defense should adopt a proactive approach to managing service acquisition that leverages strategic and transactional elements. Specifically, the Secretary of Defense should provide a capability to determine whether service acquisitions are meeting their cost, schedule, and performance objectives.

Agency Affected: Department of Defense

Status: Open

Comments: GAO will continue to monitor the Department of Defense's efforts on this recommendation. The Director, Defense Procurement and Acquisition Policy, issued a policy memorandum on October 2, 2006, entitled "Acquisition of Services", which required that senior DOD and military department officials conduct annual execution reviews to assess whether the contracts were meeting their established cost, schedule, and performance metrics. Discussions with DOD officials indicated, however, that DOD has not conducted such reviews for proposed acquisitions that they had approved and they did not have visibility as to whether the military departments or defense agencies had done so for the acquisitions for which they were responsible. In September 2008, DOD issued a memorandum intended to identify the extent to which the military departments were conducting annual post-award assessments of major service acquisitions, as required under DOD policy. In January 2010, GAO reported that DOD has not yet fully implemented a post-award review process. DOD has in the past year established offices in the Navy and Army that are intended to provide better management oversight of and insight into the department's services acquisitions, but the roles and responsibilities of these offices have not yet been fully defined. The Air Force created a similar office several years ago and as part of its efforts conducts annual reviews of programs within its portfolios.