Army Contracting Organizational Structure

The Army’s contracting leaders, contracting professionals, and  requirements generators reside in different Army organizations. Top Army Leaders Conduct Department- wide Contracting Reviews, but They Have Not Consistently Evaluated the Efficiency and Effectiveness of Contracting Operations

Since 2012, the ASA(ALT) and DASA(P) have used quarterly reviews in  an effort to assess the overall health of Army contracting and drive  improvements in contracting operations. In 2014, one of the  Army’s key strategic planning documents established that contracting  operations should adhere to schedule, cost, and performance objectives,  but the ASA(ALT) and DASA(P) have not established the timeliness, cost  savings, and contractor quality metrics needed to evaluate contracting  operations against such objectives. Since  2012, successive ASA(ALT)s have taken intermittent steps to improve  evaluations of the Army’s contracting operations, but we found that they  have not sustained these efforts. Additionally, Army leaders are concerned that  appropriations in future years may decrease if the Army does not obligate  all of its appropriations before they expire because it could appear that  the Army was appropriated more funding than it needed. A former DASA(P) told us that he directed the Army’s PARCs to report  their organizations’ cost savings attributable to contracting in the fiscal  years 2015 and 2016 CER briefings. We have  previously found that leadership must provide clear and consistent  rationales to effectively drive organizational transformations, and federal  standards for internal control state that management should internally  communicate quality information to achieve the entity’s objectives. Army Leadership Has Not Evaluated How Major Organizational Changes Have Affected Contracting Operations, and Competing Leadership Visions Have Increased Tensions

From 2008 through 2016, top Army leaders repeatedly changed reporting  relationships across the department’s contracting organizations, but they  did not establish the measurable objectives needed to determine whether  these changes were successful or if the benefits of the changes  outweighed the costs to implement them. For example, successive  ASA(ALT)s made organizational changes to centralize contracting  decision-making, while a Secretary of the Army and an AMC commanding  general made organizational changes intended to improve support to field  operations. Army Leadership Has Not Evaluated the Effects of Major Organizational Changes, Which Officials Said Disrupted Operations and Caused Confusion

It is unclear whether the benefits of the major organizational changes  Army leaders made from 2008 to 2016 have outweighed the costs  because Army leaders did not establish the measurable objectives  needed to assess the effectiveness of the changes. In the Absence of Measurable Objectives, Recent Disagreements about Reporting Relationships Have Increased Tensions among Officials

In the absence of measurable objectives and authoritative data to assess  the effectiveness of organizational changes, disagreements over the risks  and benefits of some of the most recent changes have increased tensions  between officials in the ASA(ALT) office and at AMC. In the written comments, the Department of the Army generally  concurred with our eight recommendations, although it did not concur with  one part of our first recommendation. Appendix I: Objectives, Scope, and Methodology

The objectives of this review were to examine the extent to which Army  leaders have evaluated (1) the efficiency and effectiveness of contracting  operations, and (2) the effects of organizational changes on contracting  operations. We also reviewed a 2013 report on Army  contracting commissioned by the Assistant Secretary of the Army  (Acquisition, Logistics and Technology) (ASA(ALT)), which included  recommendations for transforming Army contracting’s organizational  structure and operations.
Why GAO Did This Study

In recent years, GAO and other organizations have raised concerns about Army contracting operations, which directly affect a wide range of Army activities. In fiscal year 2016 alone, the Army obligated more than $74 billion through contract actions.
GAO was asked to examine the Army's contracting operations. This report assesses the extent to which Army leaders have evaluated (1) the efficiency and effectiveness of contracting operations and (2) the effects of organizational changes on contracting operations.
GAO reviewed reports on Army contracting commissioned by the Secretary of the Army and an ASA(ALT); ASA(ALT) memos; Army guidance reorganizing AMC; and Army-wide contracting oversight briefings from fiscal years 2015 and 2016. GAO also interviewed personnel in the Office of the ASA(ALT), at AMC, and other contracting organizations.

What GAO Found

Top Army leaders conduct department-wide contracting reviews, but they have not consistently evaluated the efficiency and effectiveness of the department's contracting operations. Instead, they have primarily focused on efforts to obligate funds before they expire, as well as competition rates and small business participation. In 2014, one of the Army's key strategic planning documents established that contracting operations should adhere to schedule, cost, and performance objectives, but Army leaders have not established the timeliness, cost savings, and contractor quality metrics needed to evaluate contracting operations against such objectives. Without adequate metrics, Army leaders will not have the information needed to determine whether Army contracting operations are meeting the department's objectives. Since 2012, Army leaders, including successive Assistant Secretaries of the Army (Acquisition, Logistics and Technology) (ASA(ALT)), have acknowledged a need for improvements in contracting and have taken positive intermittent steps, but GAO found that these leaders did not sustain the efforts or—alternately—provide a rationale for not doing so. GAO has previously found that leadership must provide clear and consistent rationales to effectively drive organizational transformations. If Army leadership does not document its rationale for key decisions, the Army's contracting organizations may be missing critical information to effectively improve operations going forward.
Top Army leaders have not evaluated the effects of major organizational changes on contracting operations despite repeatedly changing reporting relationships across contracting organizations since 2008, when the Secretary of the Army created the Army Contracting Command. The number of changes has increased since 2012, with five major changes in 2016.
Some Army leaders made organizational changes to centralize contracting decision-making, while others made changes intended to improve support to field operations. When Army leaders made these changes, they did not establish measurable objectives in accordance with federal standards for internal control, and officials from eight different Army organizations told GAO that the numerous changes disrupted contracting operations and caused confusion. Further, GAO found that disagreements over the associated risks and benefits have increased tensions among officials in the ASA(ALT) office and at the Army Materiel Command (AMC). In the absence of measurable objectives and authoritative data, it is unclear whether the benefits of the changes outweighed the costs to implement them.

What GAO Recommends

GAO is making eight recommendations to improve the Army's contracting operations such as: developing metrics to assess contracting operations for timeliness, cost savings, and contractor quality; documenting rationales for key decisions; and establishing measurable objectives to assess the effects of organizational changes on contracting operations. The Army generally concurred with GAO's recommendations, but did not agree to establish a contractor quality metric because contracting organizations cannot control all variables that affect quality. GAO continues to believe this action is needed as discussed in the report.