Defense Acquisitions:

Further Actions Needed to Improve Accountability for DOD's Inventory of Contracted Services

GAO-12-357: Published: Apr 6, 2012. Publicly Released: Apr 9, 2012.

Additional Materials:

Contact:

Timothy J. Dinapoli
(202) 512-3000
dinapolit@gao.gov

 

Cary B. Russell
(202) 512-5431
russellc@gao.gov

 

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(202) 512-4800
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What GAO Found

The Department of Defense (DOD) made a number of changes to improve the utility of the fiscal year 2010 inventory, such as centrally preparing contract data to provide greater consistency among DOD components and increasing the level of detail on the services provided. DOD, however, continued to rely primarily on the Federal Procurement Data System-Next Generation (FPDS-NG) for the inventory for most defense components other than the Army. As such, DOD acknowledged a number of factors that limited the utility, accuracy, and completeness of the inventory data. For example, FPDS-NG does not identify more than one type of service purchased for each contract action, provide the number of contractor full-time equivalent personnel, or identify the requiring activity. As before, the Army used its Contractor Manpower Reporting Application to compile its fiscal year 2010 inventory. This system collects data reported by contractors on services performed at the contract line item level, including information on labor hours and the function and mission performed. DOD officials noted that the Army’s current process complies with legislative requirements. In January 2011, GAO recommended that DOD develop a plan with time frames and the necessary resources to facilitate its efforts to collect contractor manpower data and address other limitations in its approach to meeting inventory requirements. DOD concurred with these recommendations. In November 2011, DOD submitted to Congress a plan to collect contractor manpower data. DOD officials noted that developing a common data system to collect and house these data would be challenging given the different requirements from the military departments and components. Consequently, DOD does not expect to fully collect contractor manpower data until fiscal year 2016. DOD’s plan, however, does not establish milestones or specify how it will meet the legislative requirement to identify the requiring activity and the function and missions performed by the contractor.

Military departments’ required reviews of their fiscal year 2009 inventories of contracted services were incomplete. Navy headquarters officials had no assurance that their commands conducted the required reviews, and GAO found no evidence at the commands it contacted that the required reviews were conducted. Army and Air Force inventory reviews identified 1,935 and 91 instances, respectively, in which contractors were performing inherently governmental functions, though this variation may reflect differences in the departments’ approaches to conducting the reviews. In 8 of the 12 Army and Air Force cases GAO reviewed, contractors continued to perform functions the military departments identified as inherently governmental. The absence of guidance that provided for clear lines of responsibility for conducting, documenting, and addressing the results of the reviews contributed to these outcomes. Further, Army officials cited difficulty in hiring DOD civilians caused by DOD’s decision to freeze civilian full-time equivalents at fiscal year 2010 levels. DOD issued guidance in December 2011 that will require the military departments and components to certify that they have conducted the required reviews. The guidance, however, does not clearly establish lines of accountability and responsibility within the military departments and defense components for conducting the inventory reviews and addressing instances where contractors are identified as performing inherently governmental functions.

Why GAO Did This Study

DOD relies on contractors to perform many functions, which can offer benefits for DOD. GAO’s work has shown that reliance on contractors to support core missions, however, can place DOD at risk of contractors performing inherently governmental functions.

In 2008, Congress required DOD to compile and review an annual inventory of contractors working under contracts for services. The 2010 defense authorization act directed GAO to report for 3 years on these inventories. In January 2011, GAO reported on limitations to DOD’s inventory approach. For this report, GAO assessed (1) DOD’s progress in addressing these limitations and
(2) the extent to which the military departments addressed instances of contractors performing functions identified as inherently governmental during reviews of their fiscal year 2009 inventories. GAO reviewed DOD guidance, interviewed acquisition and manpower officials, and assessed 12 instances from a nongeneralizable sample in which the Air Force and Army determined that contractors had performed inherently governmental functions

What GAO Recommends

GAO recommends that the military departments and components develop guidance that provides for clear lines of authority, responsibility, and accountability for conducting an inventory review and that the Army and Air Force resolve known instances of contractors performing inherently governmental functions. DOD largely agreed with GAO’s recommendations.

For more information, contact John P. Hutton at (202) 512-4841 or huttonj@gao.gov or Cary B. Russell at (404) 679-1808 or russellc@gao.gov.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To improve the execution and utility of the inventory review process, the Secretary of Defense should ensure that the military departments and defense components issue guidance to their commands that provides clear lines of authority, responsibility, and accountability for conducting an inventory review and resolving instances where functions being performed by contractors are identified as inherently governmental functions.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: In their formal response to our report, DOD agreed that is imperative each organization provides for clear lines of authority, responsibility, and accountability for conducting an inventory review, and for resolving instances where functions being performed by contractors are identified as inherently governmental. DOD, however, noted that individual military service or component guidance should not be mandated but rather determined by each component head. In addition, DOD stated that their December 2011 guidance requires component heads to certify, in writing, the completion and results of the review. In February 2013 DOD added a new reporting element to their inventory compilation and review guidance that requires components to report on the actions taken with respect to inherently governmental functions including whether the contract where these functions reside is continuing or modified, or whether the function was insourced or divested. We believe that this new reporting element addresses the intent of our recommendation, which was to resolve instances where contractors are performing functions identified as inherently governmental.

    Recommendation: To ensure that the six instances we reviewed in which the Army identified that contractors were still performing functions it deemed inherently governmental, as well as those at Kwajalein Atoll, have been properly resolved, the Secretary of the Army should review these functions, determine the status of actions to resolve the issues, and, as appropriate, take necessary corrective actions.

    Agency Affected: Department of Defense: Department of the Army

    Status: Closed - Implemented

    Comments: As of June 2013, the Army has resolved all instances we reviewed in which the Army identified contractors performing functions it deemed inherently governmental. For the case involving the use of security contractors at Kwajalein Atoll, the Army transferred responsibilities to government personnel. For the four instances of contractors performing system coordinator duties, the Deputy Director for Intelligence Systems instructed the contractors supporting his office that they were not authorized to represent the Army, were not to attend any meetings also attended by a member of Congress or congressional staff, nor were they to identify themselves as Department of the Army Systems Coordinators in any correspondence or communication. For the engineering support position, the Army noted that the contract had ended, and the function had been divested. For the Information technology manager position, the Army noted that the position had initially been miscoded as inherently governmental. Army officials added that since then, the function for this contract has been divested.

    Recommendation: To ensure that the two instances we reviewed where contractors were still performing functions the Air Force had previously identified as inherently governmental are properly resolved, the Secretary of the Air Force should review these functions, determine the status of actions to resolve the issues, and, as appropriate, take necessary corrective actions.

    Agency Affected: Department of Defense: Department of the Air Force

    Status: Closed - Implemented

    Comments: Air Force officials told us that the two instances identified in our report had been resolved. For the financial services function, Air National Guard officials noted that the contract has been closed out. For the administrative support position, Air National Guard officials told us that the performance work statement and follow-on task order was modified to remove the inherently governmental nature of the requirement.

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