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Defense Acquisitions: Further Action Needed to Better Implement Requirements for Conducting Inventory of Service Contract Activities

GAO-11-192 Published: Jan 14, 2011. Publicly Released: Jan 14, 2011.
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The Department of Defense (DOD) relies on contractors to perform myriad functions, which can offer benefits and flexibility for DOD. GAO's work has shown that reliance on contractors to support core missions, however, can place the government at risk of transferring government responsibilities to contractors. In April 2009, the Secretary of Defense announced his intent to reduce the department's reliance on contractors. In 2008, Congress required DOD to compile and review an annual inventory of the number of contractor employees working under service contracts and the functions and activities they performed. The fiscal year 2010 National Defense Authorization Act directed GAO to report annually on these inventories. GAO assessed (1) the approaches used to compile the fiscal year 2009 inventories and how the approaches have changed, and (2) how the inventories have been reviewed and used to inform workforce decisions. GAO reviewed guidance; compared the approaches used to develop the fiscal year 2008 and 2009 inventories; and interviewed acquisition and manpower officials from DOD, the military departments, and selected defense components.

DOD implemented a more uniform approach to compile its fiscal year 2009 inventories to reduce inconsistencies that resulted from DOD components using different approaches in fiscal year 2008. To do so, in May 2010 the Under Secretary of Defense for Acquisition, Technology and Logistics (AT&L) issued guidance to the Navy, Air Force, and other components that specified the categories of services to be included in the inventories; instructed them to use the Federal Procurement Data System-Next Generation (FPDS-NG) as the basis for most of the inventory data requirements; and provided a formula to estimate the number of contractor full-time equivalent personnel working under those contracts. This guidance also authorized the Army to continue to use its existing process, which incorporates contractor-reported data, including direct labor hours, from its Contractor Manpower Reporting Application. The changes in DOD's approach, in particular how DOD reflected research and development services and the use of a new formula for estimating contractor personnel for the Air Force and Navy, as well as better reporting by the Army, affected the reported fiscal year 2009 inventory data. Collectively, these changes make comparing the fiscal year 2008 and 2009 inventory data problematic. DOD officials acknowledged several continuing limitations associated with the fiscal year 2009 inventories, including the inability of FPDS-NG to provide information for all of the required data elements, and concerns about AT&L's estimating approach. AT&L's May 2010 guidance indicated that it planned to move towards collecting manpower data from contractors and indicated AT&L would work with the Office of the Under Secretary of Defense for Personnel and Readiness and other organizations to issue preliminary guidance and a proposed plan of action by August 2010. However, DOD has not yet done so. The military departments differ both in their approaches to reviewing the activities performed by contractors and the extent to which they have used the inventories to inform workforce decisions. The Army has implemented a centralized approach to identify and assess the functions being performed by contractors and has used such assessments to inform workforce decisions, including those related to identifying functions being performed by contractors that could be converted to performance by DOD civilian personnel. In contrast, the Air Force and Navy have implemented decentralized approaches that rely on major commands to review their contracted activities and report the results back to their respective headquarters. The Air Force implemented its initial review but experienced challenges, including that it did not obtain adequate information, that will likely cause its approach to evolve in the future. The Navy issued guidance on completing reviews to its commands in September 2010, but the results of the reviews had not been reported as of November 2010. Additionally, Air Force and Navy officials said that to date they have made limited use of the inventories to date to help inform their workforce decisions. GAO recommends DOD develop and issue a plan of action to collect manpower data and, in the interim, improve its estimating approach. DOD concurred with the recommendations.


Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense To help implement the requirements for conducting the inventory of service contract activities, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology and Logistics, and the Under Secretary of Defense for Personnel and Readiness to work jointly to develop a plan of action, including anticipated time frames and necessary resources, to facilitate the department's stated intent of collecting manpower data and to address other limitations in its current approach to meeting inventory requirements, including those specific to FPDS-NG.
Closed – Not Implemented
In November 2011, the Undersecretary of Defense for Acquisition, Technology and Logistics (AT&L), and the Undersecretary of Defense for Personnel and Readiness (P&R) issued a department-wide plan intended to meet the legislative inventory of contracted services requirements, including those for collecting contractor manpower data and documenting contractor full-time equivalents. In November 2012, AT&L and P&R issued a department-wide memo indicating a plan to implement an enterprisewide-Contractor Manpower Reporting Application, modeled after the Army's existing system. In September 2014, P&R initiated a strategic review of options for data collection, which raised a question whether DOD planned to continue to implement the ECMRA or develop a new system. The efforts initiated in response to the November 2011 plan and November 2012 memo have been overcome by DOD's September 2014 strategic review. DOD still lacks a comprehensive plan with timeframes and milestones to measure its progress toward a common data system and associated business processes. As such, we have closed this recommendation as not implemented.
Department of Defense To help implement the requirements for conducting the inventory of service contract activities, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology and Logistics, and the Under Secretary of Defense for Personnel and Readiness to work jointly to assess ways to improve the department's approach to estimating contractor FTEs until the department is able to collect manpower data from contractors.
Closed – Implemented
In December 2011, the Undersecretaries for Acquisition, Technology and Logistics (AT&L), and Personnel and Readiness (P&R) issued guidance to components that identified five methodologies components could use singularly or in combination to estimate or calculate the number of contractor FTEs in their inventories. These methodologies could be used until components began collecting direct labor hour from contractors. Subsequently, in November 2012, the Under Secretaries for P&R and AT&L issued a joint memorandum that instructed components to ensure all actions to procure contracted services, including contracts for goods with defined requirements for services, include a requirement for the contractor to report all contractor labor hours required for performance of the services provided. The joint memorandum further instructed that data will be reported using an Enterprise-wide Contractor Manpower Reporting Application (eCMRA) and provided that the eCMRA website would be available to receive data to support the fiscal year 2013 inventory.

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Contract administrationContract oversightContract performanceContractor personnelDefense capabilitiesDefense procurementDepartment of Defense contractorsMilitary inventoriesMilitary procurementService contracts