The Department of Defense's contracts for services totaled more than $190 billion in FY 2019. We have highlighted service acquisitions as an oversight issue within our DOD contract management High Risk area since 2001.

The DOD reported to Congress in October 2020 on actions it took, or plans to take, to address many key issues we have identified in prior work.

One remaining unresolved issue is how DOD leadership will collect 5-year spending plans for services across the department. These plans can better inform decisions about how much the DOD will spend on different types of contractor-provided services, such as IT and weapon system support.

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What GAO Found

The Department of Defense (DOD) relies on contractors to provide a wide array of services, including support for management, information technology, and weapon systems. DOD obligated about $190 billion on service acquisitions in fiscal year 2019 (see figure).

Department of Defense Obligations for Service Acquisitions by Military Department and Defense Agencies and Field Activities, Fiscal Year 2019

Since 2001, GAO has highlighted service acquisitions as an issue for oversight within the DOD Contract Management area in its High-Risk List. Among other things, the High-Risk List and GAO's prior work have identified that:

• DOD's service requirements reviews were narrowly focused on individual contracts rather than entire capability portfolios,
• DOD's efforts to use its inventory of contracted services to inform management decisions were hindered by data collection issues, and
• DOD's budget exhibits did not clearly identify service acquisitions.

In October 2020, DOD issued a report to Congress describing its current mechanisms and plans for managing and overseeing service contracts. GAO found that this report addresses some of the key issues identified in GAO's High-Risk List, but does not address others.

Requirement reviews. The DOD report summarizes guidance the department issued in January 2020 that links requirements reviews to budget trade-offs, and clarifies the relationship between service acquisition management and category management activities. Category management is an Office of Management and Budget-led, government-wide initiative to reorganize government spending around fewer, larger contracts and use the government's purchasing power to buy like a single enterprise. These efforts have the potential to improve how requirements reviews support budget trade-off decisions within and across capability portfolios.

Inventory of contracted services. The DOD report discusses the department's recent transition to the government-wide system other federal agencies use to collect data for their inventories of contracted services, and explains that this transition is intended to reduce the burden of data collection for defense contractors and improve compliance. However, the report does not discuss how DOD plans to use this data to inform decision-making and workforce planning, the key issues GAO has identified in past work.

Future-year spending plans. The DOD report does not discuss our finding in a prior report that DOD could improve its ability to strategically manage service acquisitions by improving visibility on future budgetary requirements. Instead, DOD's report states that DOD plans to address capability gaps in budget planning for service contracts in a separate effort in response to a provision in the National Defense Authorization Act for Fiscal Year 2020 that might address GAO's recommendations. DOD officials told GAO they are working to better understand that provision before initiating their effort.

Why GAO Did This Study

The Senate report on the National Defense Authorization Act for Fiscal Year 2020 included a provision for the Secretary of Defense to submit a report to the congressional defense committees on current mechanisms for overseeing defense service contracts, and for GAO to assess this report. DOD issued its report to Congress in the second week of October 2020. This GAO report assesses the extent to which that DOD report addresses service acquisition issues identified in GAO's High-Risk List and other products.

GAO reviewed DOD's report to Congress on defense service acquisitions and GAO's past reports on defense service acquisitions, including GAO's 2019 High-Risk List and 11 other products issued between 2011 and 2018. GAO collected and assessed additional documentation from DOD offices and military departments, and interviewed officials from these offices and departments to collect additional information about DOD plans to improve service acquisitions.

For more information, contact Timothy DiNapoli at (202) 512-4841 or DiNapoliT@gao.gov.