DOD’s Cost- Comparison Report Addressed Most Elements in Senate Report 114-49

DOD’s Cost-Comparison Report addressed three elements and partially  addressed one element concerning the accounting for the fully-burdened,  or full, cost of federal civilian and service contractor personnel performing  functions at the selected installations, as shown in table 1. DOD  concluded that for the 21,000 federal civilians and service contractors  compared, neither federal civilians nor service contractors were  predominately more or less expensive, with the costs being dependent  upon the function being performed, location, and level of expertise. DOD  noted that the results were not generalizable across the department. Each of the elements and our assessment are discussed below. DOD Developed a Methodology to Assess Performance of Functions Being Performed by Federal Civilian and Service Contractor Personnel on Military Installations

We believe that DOD addressed the reporting element to assess  performance of functions performed by civilian and contractor personnel  by developing a methodology to assess performance of functions  performed by federal civilians and service contractors at organizations  within nine geographic regions including two locations outside the  continental United States. According to DOD’s Cost-Comparison Report,  DOD determined that personnel need to perform at least 80 percent  common tasks to be able to make a comparison. DOD Accounted for Labor Costs but Excluded Some Costs That Encompass Full Costs of Personnel

We believe that DOD partially addressed the reporting element to account  for the full cost of civilian and contractor personnel by providing an  accounting of the labor costs of selected federal civilian and service  contractor full-time equivalents for personnel performing similar functions  at government-owned facilities during calendar year 2015, but excluding  certain non-labor costs from its cost calculations. DOD Compared Its Calculated Costs of Performance of Selected Functions by Federal Civilians and Service Contractor Personnel at Selected Installations

We believe that DOD addressed the reporting element to compare costs  by comparing its calculated costs of selected federal civilians and service  contractors performing similar functions at selected installations. DOD Assessed Flexible Hiring Authorities Available for Employment and Retention of DOD Civilian Employees

We believe that DOD addressed the reporting element by assessing the  flexible employment authorities for the employment and retention of  federal civilian employees at the same 17 organizations used for the cost  comparison. Specifically, DOD sent questionnaires to DOD hiring officials  and human resource professionals to collect information on flexible  employment authorities. DOD’s Cost-Comparison Report made several  conclusions regarding flexible hiring authorities and made one  recommendation. In   written comments, DOD non-concurred with our assessment that DOD  partially addressed the mandated reporting element to provide an  accounting of the fully-burdened cost of federal civilian and service  contractor personnel performing functions at the selected installations to  include training, benefits, reimbursable costs, and facility overhead. The study shall include:   (1) An assessment of performance of such functions at six  DOD installations selected by the Secretary for purposes  of the study from among DOD installations at which  functions are performed by an appropriate mix of civilian  personnel and contractors, with four such installations to  be located in the continental United States and two such  installations to be located outside the continental United  States;  (2) An accounting of the fully-burdened cost of DOD  civilian personnel and contractors performing functions for  DOD (including costs associated with training, benefits,  reimbursable costs under chapter 43 of title 41, United  States Code, and facility overhead) in order to permit a  direct comparison between the cost of performance of  functions by DOD civilian personnel and the cost of the  performance of functions by contractors;  (3) A comparison of the cost of performance of the full  range of functions, required expertise, and managerial  qualities required to adequately perform the function to be  compared, including:  a. Secretarial, clerical, or administrative duties,  including data entry;  b. As we reported, DOD noted in its cost comparison report that it identified  labor costs used in its comparisons. We are also sending copies to the Secretary of Defense, the  Director of the Office of Cost assessment and Program Evaluation and  other interested parties.
Why GAO Did This Study

In addition to more than 2.2 million active duty and reserve personnel, DOD employs about 760,000 federal civilians and more than 560,000 contractors. In the Senate Report 114-49 accompanying a bill for the National Defense Authorization Act for Fiscal Year 2016 included a provision for DOD to issue a report (1) assessing functions performed by federal civilian and service contractor personnel, (2) accounting for the full costs of federal civilian and service contractor personnel performing these functions, (3) comparing these costs, and (4) assessing available hiring and retention authorities for federal civilians.
The Senate report also included a provision for GAO to assess DOD's report, which DOD submitted to Congress in April 2017. This report examines the extent to which DOD's report addressed the prescribed congressional elements.
GAO reviewed DOD's report and compared it to the prescribed elements, examined documents relevant to DOD's cost estimating and comparison methodology, and interviewed DOD officials, including those in its Office of Cost Assessment and Program Evaluation responsible for the calculations in DOD's report.

What GAO Found

In response to Congressional direction, the Department of Defense (DOD) issued a report in April 2017 comparing the costs of federal civilian and service contractor personnel at select installations. The report addressed three out of four provision elements and partially addressed one, as discussed below. DOD concluded that neither federal civilians nor service contractors were predominately more or less expensive, with costs being dependent on position, location, and level of seniority. DOD noted that it used a non-probability based sample of personnel for its report, and the results are not generalizable.
An assessment of performance of functions being performed by federal civilian and service contractor personnel at six military installations, with four being in the continental United States and two being outside the continental United States. GAO believes that DOD addressed this requirement because it developed a methodology to assess performance of functions performed by federal civilians and service contractors at 17 organizations within nine geographic regions including two locations outside the continental United States. DOD used data from the Defense Civilian Personnel Data System to identify military installations with large reported numbers of federal civilians. DOD determined that personnel need to perform at least 80 percent common tasks to be able to make a comparison.
An accounting of the fully-burdened, or full, cost of federal civilian and service contractor personnel performing functions at the selected installations including training, benefits, reimbursable costs, and facility overhead. GAO believes that DOD partially addressed this requirement because while it calculated the labor costs of selected federal civilian and service contractor full-time equivalents performing similar functions for organizations at government-owned facilities, it excluded certain non-labor costs from its calculations.
A comparison of the costs of performance of these functions by federal civilians and service contractor personnel at the selected installations. GAO believes that DOD addressed this requirement because it compared calculated costs for selected federal civilians and service contractors performing similar functions at selected installations and included those comparisons in its report.
An assessment of the flexible employment authorities for the employment and retention of federal civilian employees. GAO believes that DOD addressed this requirement because it sent questionnaires to DOD hiring officials and human resource professionals to collect information on flexible employment authorities and conducted interviews with these and human resource professionals at the same 17 organizations used for the cost comparison. Based on an analysis of the information collected, DOD's report included several conclusions regarding flexible hiring authorities and made one recommendation.

What GAO Recommends

GAO is not making any recommendations; however, DOD non-concurred with GAO's assessment that DOD partially addressed the element to account for the full cost of personnel. GAO believes the assessment is correct as discussed in the report.