DOD Contract Management

DOD spent about $392 billion acquiring goods and services in fiscal year 2008, more than double the amount it spent 7 years earlier. Despite this substantial increase, the number of civilian and military personnel in DOD’s acquisition workforce has remained relatively steady. The lack of well-defined requirements, the use of ill-suited business arrangements, and the lack of an adequate number of trained acquisition and contract oversight personnel contribute to unmet expectations and schedule delays and place the department at risk of potentially paying more than necessary. GAO designated DOD contract management as a high-risk area in 1992.

What We Found

• Properly managing the acquisition of goods and services requires an acquisition workforce with the right skills and capabilities. In March 2009, however, GAO reported that DOD lacked complete information on the skill sets of the current acquisition workforce and whether these skill sets were sufficient to accomplish its missions
• DOD increasingly relies on contractors to provide services to help meet critical missions and support acquisition functions. In March 2009, GAO reported that DOD lacked critical information on the use and skill sets of contractor personnel. DOD reliance on contractors presents such challenges as
• determining which functions and activities should be contracted out and which should not to ensure institutional capacity;
• developing a total workforce strategy to address the appropriate mix of contractor and government personnel;
• identifying and distinguishing the roles and responsibilities of contractors and civilian and military personnel; and
• ensuring appropriate oversight, including addressing risks, ethics concerns, and surveillance needs.
• DOD continues to face challenges in employing sound business arrangements. GAO reported in 2007 on DOD’s use of time-and-materials contracts and undefinitized contract actions, two arrangements for which DOD obligated billions of dollars but which can pose risk if not effectively managed. For example
• ime-and-materials contracts can be awarded quickly and adjusted when requirements or funding are uncertain, but GAO found few attempts to convert follow-on work to less risky contract types and wide discrepancies in DOD’s oversight.
• DOD does not always definitize—or reach final agreement on—contract terms within required time frames. Until contracts are definitized, DOD bears increased risk because contractors have little incentive to control costs.
• DOD’s long-standing problems managing and overseeing contractors at deployed locations make it difficult for the department to be assured it is getting the services it needs on time and at a fair and reasonable price. Poor contract management and oversight can affect military operations and also lead to monetary consequences, including waste, fraud, and abuse. For example,
• In 2008 GAO found that management and oversight problems with an equipment maintenance contract in Southwest Asia may have resulted in some deployed units not receiving the equipment they needed in time.
• In 2009, GAO reported that DOD faced continued challenges in managing and overseeing contractors in both Iraq and Afghanistan.
• DOD has taken a variety of steps to address many of these issues. For example,
• In April 2009, DOD announced its intent to hire more than 33,000 civilian personnel and scale back the role of contractors, and subsequently issued guidance to identify contractor-provided services that might be better performed by DOD military or civilian personnel.
• DOD also has efforts under way to improve its management of major services acquisitions, including has issuing guidance and establishing peer reviews of major services acquisitions, but these efforts are relatively new.

^ Back to topWhat Needs to Be Done

To improve outcomes, DOD needs to

• ensure that it maintains an acquisition workforce that is adequately sized, trained, and equipped, so that it can effectively plan, negotiate, award, and manage the range of contracts needed to meet the department’s needs;

  Highlights of GAO-08-360 (PDF), Highlights of GAO-08-621T (PDF), and and Highlights of GAO-09-271 (PDF)

• provide additional guidance, tools, and assessments to ensure its personnel employ well-defined and sound business arrangements, as well as provide effective contractor oversight;

  Highlights of GAO-06-830 (PDF), Highlights of GAO-07-273 (PDF), Highlights of GAO-07-559, GAO-08-316R (PDF), and Highlights of GAO-09-271 (PDF)

• adopt a proactive approach to managing service acquisitions, in part to ensure that decisions on individual transactions are consistent with DOD’s strategic goals and objectives;

  Highlights of GAO-07-20 (PDF), and Highlights of GAO-09-271 (PDF)

• assess the risks that its increasing reliance on contractors poses; develop, as appropriate, new or revised policy, guidance, or contract clauses; and ensure it retains a sufficient institutional capability to provide effective management and oversight; and

  Highlights of GAO-08-169 (PDF), Highlights of GAO-08-360 (PDF), Highlights of GAO-08-572T (PDF), Highlights of GAO-08-621T (PDF), and Highlights of GAO-09-271 (PDF)

• determine the appropriate mix of contractor, civilian, and military personnel in shaping its total force for the future, including the role and use of contractors to support deployed forces.

  Highlights of GAO-08-436T (PDF), Highlights of GAO-08-572T (PDF), and Highlights of GAO-09-271 (PDF)

^ Back to topKey Reports

Defense Acquisitions

Department of Defense

Defense Management

Defense Contracting

Defense Contracting

Defense Contracting

Defense Acquisitions