Human Capital: Additional Steps Needed to Help Determine the Right Size and Composition of DOD's Total Workforce

GAO-13-470 Published: May 29, 2013. Publicly Released: May 29, 2013.
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What GAO Found

Since fiscal year 2001, the Department of Defense's (DOD) military and civilian workforces peaked in fiscal year 2011 at 3.1 million personnel combined, and is projected to decrease over the next five years to below the fiscal year 2001 level of 2.9 million. Comparable historical data on DOD's contractor workforce are not available. In fiscal year 2011, DOD reported that it contracted for services performed by an estimated 710,000 contractor full time equivalents (FTEs)--a workforce equal to about 90 percent of the size of DOD's civilian workforce of 807,000 FTEs. Using fiscal year 2013 constant dollars, GAO's analysis of DOD spending on contracted services shows obligations peaked in fiscal year 2010 at about $195 billion, more than twice the amount spent in fiscal year 2001. This spending decreased to about $174 billion in fiscal year 2012.

DOD has taken some steps to improve its understanding and management of its total workforce; however, several shortcomings remain. Specifically, DOD has yet to assess the appropriate mix of its military, civilian, and contractor personnel capabilities in its strategic workforce plan as required by law. Further, DOD has not updated its policies and procedures to reflect current statutory requirements to use its civilian strategic workforce plan and the inventory of contracted services to determine the appropriate mix of personnel to perform DOD's mission. Moreover, DOD's strategic human capital plan does not contain certain required elements and information and several factors limit the accuracy of its inventory of contracted services. As a result, the department is hampered in making more informed strategic workforce mix decisions, which is crucial to meeting DOD's congressional mandate to manage its total workforce.

Although DOD is not required to perform analysis to identify a list of core or critical functions across the department as a whole, DOD has identified broad core mission areas of the department. However, its current policies do not fully reflect federal policy concerning the identification of critical functions. Office of Federal Procurement Policy Policy Letter 11-01 requires agencies to identify and ensure that they retain control over critical functions that are core to the agency's mission, but may be contracted out to the private sector. DOD's policies and procedures predate the publication of this requirement, and consequently contain no reference to it. Absent specific policies and procedures on this process, DOD may lack assurance that it retains enough government employees to maintain control over these important functions.

DOD components used various methods and data sources, including their inventories of contracted services, to estimate contractor FTEs for budget submissions, but GAO's analysis found that the contractor FTE estimates have significant limitations and do not accurately reflect the number of contractors providing services to DOD. Components encountered challenges, to include the use of estimating techniques based on inventory data that may not be accurate and the lack of a crosswalk between the inventory and specific budget codes. While the Army has a process that addresses these challenges, it may be several years before the remaining DOD components are able to do the same. DOD is taking steps to help the remaining components address these challenges, but, in the meantime, the budget does not provide an explanation of how the contractor FTE estimates are derived and what limitations apply.

Why GAO Did This Study

The federal government’s growing fiscal challenges underscore the importance of DOD employing a strategic approach to determining the appropriate mix of its military, civilian, and contractor personnel to perform its mission, and determining the functions that are critical for the department to achieve its missions. A committee report accompanying the National Defense Authorization Act for Fiscal Year 2013 directed GAO to assess the measures DOD is taking to balance its workforce against its requirements. GAO examined (1) historical and projected workforce trends, (2) the actions DOD has taken to determine an appropriate workforce mix, (3) the analysis DOD performs to identify core or critical functions, and (4) how DOD used its inventory of contracted services to inform budget submissions. GAO performed trend analysis to determine historical and future workforce levels. GAO also reviewed relevant statutes, DOD and military department guidance, and budgetary submissions, and interviewed officials from DOD and the Office of Management and Budget (OMB).

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GAO recommends that DOD revise its policies and procedures to incorporate (1) legislative requirements for workforce planning and (2) federal requirements for the identification of critical functions. GAO also recommends that DOD provide better information regarding contractor FTEs used in budget submissions. DOD noted actions that it has underway or planned to respond to these recommendations.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense To help ensure DOD's workforce mix guidance reflects the current statutory requirements for total force management policy set forth in 10 U.S.C. 129a as well as the regulatory requirements set forth in the Office of Federal Procurement Policy's September 2011 policy letter, the Secretary of Defense should direct the Under Secretary of Defense for Personnel and Readiness to revise DOD's existing workforce policies and procedures to address the (1) determination of the appropriate workforce mix, and (2) identification of critical functions.
Closed – Not Implemented
DOD partially concurred with this recommendation and stated in its agency comments that DOD Directive 1100.4. was undergoing revision and entering the formal issuance process for signature by the Deputy Secretary of Defense. Further, DOD stated that the updated directive would authorize and direct the revision of the instruction. However, as of September 2020, neither the directive nor instruction has been revised and reissued. In light of the department's inaction on this recommendation for more than seven years, we are closing this recommendation as not implemented.
Department of Defense Until such time that DOD is able to accurately project contractor FTE estimates it presents in budget submissions using the inventories and required reviews, the Secretary of Defense should direct the Under Secretary of Defense (Comptroller) to include an explanation in annual budget exhibits of the methodology used to project contractor FTE estimates and any limitations of that methodology or the underlying information to which the methodology is applied.
Closed – Not Implemented
DOD partially concurred with this recommendation and stated in its agency comments that it will strengthen the annual guidance as improvements are made in the inventory of contracted services. Further, DOD stated that if a component's methodology deviates from the process defined in the annual guidance, a footnote explaining the deviation will be included in the contracted services section of the Operation and Maintenance Overview book within the budget. However, the department could not provide any evidence of steps taken in response to this recommendation, and associated budget language has remained unchanged since we made this recommendation. We have issued numerous more recent GAO reports that have identified continuing issues regarding DOD's inventory of contracted services and the accuracy of DOD's contractor FTE estimates. As DOD has not taken action on this specific recommendation regarding explanations in budget materials and GAO has made more recent recommendations to more broadly improve DOD's inventory of contracted services, we are closing this recommendation as not implemented.

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