In  addition, in 2011 Congress amended section 2330a to add a requirement  that the secretaries of the military departments and heads of the defense  agencies develop a plan, including an enforcement mechanism and  approval process, to provide for the use of the inventory by the military department or  defense agency to implement requirements of section 129a of title 10,  U.S. Code (section 129a requires policies and procedures for  determining the appropriate mix of military, civilian, and contractor  personnel to perform DOD’s mission);  facilitate the use of the inventory for compliance with section 235 of  title 10, U.S. Code (section 235 requires budget justification materials  to include the amount requested for procurement of contract services  and the number of full-time contractor employees projected); provide for appropriate consideration of the conversion of activities  identified under section 2463 of title 10, U.S. Code (section 2463  requires procedures to ensure civilian employees are considered for  performing critical functions); and ensure that the inventory is used to inform strategic workforce  planning. In section 812 of the National Defense Authorization Act for Fiscal Year  2017, enacted in December 2016, Congress further amended section  2330a by reducing the scope of the required data collection, specifying  the type of contracted services to be included in an inventory summary  submitted to Congress, and calling for particular attention to the military  departments’ review of certain high-risk contracts (see table 1). Prior GAO Work

Over the past 8 years, we have issued several reports on DOD’s efforts to  compile and review its inventory of contracted services. In November 2014, we found the military departments generally had  not developed plans to use the inventory to facilitate DOD’s workforce  planning, workforce mix, and budget decision-making processes, and  that numerous offices were responsible for the various decision- making processes at the military departments. This, in turn, left the  department at risk of not complying with legislative requirements. We also found that the military departments had not yet developed  plans to use the inventory to inform workforce mix, strategic workforce  planning, and budget decision-making. DOD Collected Data for the Inventory of Fiscal Year 2016 Contracted Services Using the Same Sources as in Prior Years

To facilitate DOD’s submission of an inventory summary to Congress,  OSD’s inventory guidance required each military department to submit to  the offices of the USD(AT&L) and USD(P&R) a list of all services  provided under contract consistent with the guidance and within the  scope of section 2330a of title 10, U.S. Code, as amended by section 812  of the fiscal year 2017 NDAA. For example, the guidance  required that the inventory submissions include, at a minimum, all  purchases of services with a total contract value of $3 million or more and  in the following service acquisition portfolio groups: logistics management  services; equipment-related services; knowledge-based services; and  electronics and communications services. The military departments varied somewhat in how  they collected and reported their data, which is permitted under OSD’s  guidance. The Navy  did not provide a list of its fiscal year 2016 service purchases in time  to be included in the inventory summary for Congress, but a  USD(AT&L) official said the information provided was sufficient to  allow OSD to prepare the summary. The Navy subsequently  submitted its full inventory of fiscal year 2016 contracted services to  OSD in March 2018 and reported over $6.5 billion in obligations and  over 45,000 contractor FTEs. In addition,  the Air Force specifically identified purchases within each of the four  service acquisition portfolio groups specified in OSD’s inventory  guidance. OSD submitted this inventory summary to Congress in February 2018. Military Departments Have Not Developed Statutorily Required Plans and Continue to Make Limited Use of the Inventory to Inform Management Decisions

The military departments generally have not developed plans to use the  inventory to inform management decisions as required by subsection  2330a(e) of title 10 of the U.S. Code and OSD’s inventory guidance. This limited use may also reflect, in part,  the lack of accountable officials responsible for developing plans and  enforcement mechanisms to use the inventory, as we recommended in  November 2014. As of January 2018, the Army and Navy  still had not named accountable officials responsible for developing plans  and enforcement mechanisms to use the inventory for workforce and  budget decisions, according to officials at those departments. These officials noted that the data reflected  in the inventory are often too outdated to help inform strategic decisions  that are usually made at the local level—such as a specific military  installation—based on real-time data. DOD officials have also identified ways in which the  inventory can be useful. Agency Comments

We are not making new recommendations in this report. In its written comments, which  are reprinted in appendix I, DOD stated that it remains committed to  improving its processes for collecting, analyzing, and reporting contracted  services data.
Why GAO Did This Study

DOD obligated about $150 billion on contracted services—such as information technology support and maintenance of defense facilities—in fiscal year 2016. DOD has faced long-standing challenges in effectively managing its service acquisitions.
The National Defense Authorization Act for Fiscal Year 2017 amended existing requirements for DOD to annually collect data on contracted services and to compile and review an inventory of the functions performed by contractor personnel. The Act also contained a provision for GAO to report on the status of this data collection and to assess DOD's use of the inventory. This report addresses how DOD (1) collected data to create an inventory of fiscal year 2016 contracted services and (2) used the inventory to inform workforce planning, workforce mix, and budget decisions. GAO has reported on DOD's inventory of contracted services since 2010.
GAO reviewed OSD and the military departments' guidance, as well as the military departments' inventory submissions to OSD. GAO also analyzed contracted services data and interviewed OSD and military department officials.

What GAO Found

GAO found that the Department of Defense (DOD) used the same sources as it did in prior years to collect data and create an inventory of fiscal year 2016 contracted services, which is intended, in part, to help DOD make more strategic workforce decisions and better align resources. Office of the Secretary of Defense (OSD) guidance, issued in September 2017 to implement congressional direction, required the military departments to include in their submissions, at a minimum, purchases of services with a total contract value of $3 million or more, and in four services acquisition portfolio groups—logistics management, equipment-related, knowledge-based, and electronics and communications.
As permitted under OSD's inventory guidance, the military departments varied somewhat in how they reported their contracted services data to OSD. For example, the Army and Air Force included purchases both over and under $3 million and the Air Force also identified purchases by the four portfolio groups. The Navy submitted summary data of contracted services but did not provide a list of purchases in time to be included in an inventory summary for Congress. An OSD official said, however, that the information provided was sufficient to prepare the inventory summary, which OSD submitted to Congress in February 2018. The Navy subsequently provided a list of its fiscal year 2016 service purchases to OSD in March 2018.
Military departments generally have not developed plans to use the inventory for workforce and budget decisions, as statutorily required. This is consistent with what GAO found in November 2014 and October 2016. GAO's analysis found that the military departments' guidance generally does not require using the inventory in workforce and budget decisions (see table).
Army manpower officials told GAO that inventory information such as the number of contractor full-time equivalents and the functions performed can be used to inform workforce mix decisions. However, workforce and budget officials at the Army, Navy, and Air Force stated they make limited use of the inventory to inform decision-making, in part because by the time the inventory is available, the data reflected are often too outdated to inform strategic decisions. GAO has previously recommended ways to improve use of the inventory. In November 2014, for example, GAO found that a lack of officials at the military departments who are accountable for integrating the use of the inventory leaves the department at continued risk of not complying with the legislative requirement to use the inventory to support management decisions. This issue persists, as the military departments have not made final designations for accountable officials responsible for developing plans and enforcement mechanisms to use the inventory.

What GAO Recommends

GAO is not making new recommendations in this report. Seven of 18 prior GAO recommendations related to the inventory remain open, including a recommendation for DOD to identify officials at the military departments responsible for developing plans and enforcement mechanisms to use the inventory. In its comments, DOD stated it is committed to improving its inventory processes.