Transcript for: Reforming Defense Contractor Services

Description: In fiscal year 2016, the Department of Defense spent $150
billion on service contracts. How do these services support DOD's
mission? How does DOD manage these contracts?

Related GAO Work: GAO-17-482: Defense Contracted Services: DOD Needs to
Reassess Key Leadership Roles and Clarify Policies for Requirements
Review Boards

Released: August 2017

[ Background Music ]

[ Tim DiNapoli: ] And so without contract of services, the military
cannot go to war.

[ Sarah Kaczmarek: ] Welcome to GAO's Watchdog Report, your source for
news and information from the U.S. Government Accountability Office. I'm
Sarah Kaczmarek. In fiscal year 2016, the Department of Defense spent
$150 billion on service contracts that cover jobs like engineering and
IT support. To better manage these contracts, DOD established new
leadership roles throughout the agency. I sat down with Tim DiNapoli, a
director in our Acquisition and Sourcing Management team, to talk about
GAO's latest in a series of reports looking into DOD's service contract
management. First, I asked Tim to tell me a little bit more about these
roles and whether they've been effective.

[ Tim DiNapoli: ] Back in January of 2016, the Department of Defense
established three new leadership positions that they were hoping would
dramatically transform how the Department of Defense acquired services.
These positions, supported by a new services requirements review board,
which was going to focus on how to better define services and kind of
look and validate services at the military department and command level,
these were going to dramatically transform how DOD bought services. So
on paper, all the lines matched up. It seemed like a great process.
Unfortunately, it didn't work out.

[ Sarah Kaczmarek: ] So let me take a step back and ask you, just about
how important are these services? Are these contract positions essential
to helping DOD fulfill its mission?

[ Tim DiNapoli: ] They absolutely are. You know, when I think of the
Department of Defense, I think of the men and women who protect us on a
daily basis. But then, I also think of the big things -- the aircraft
carriers, the tanks and the planes that, you know, the things that go
boom. Services, however, are those things that make all those other
things work, and so without contract of services, the military cannot go
to war. And so they're that essential to, for DOD to achieve its
mission. And in large part, we do that fairly well. Services are
provided, and folks are fairly happy with them on the large. But what
they're not doing is maximizing the department's buying power,
leveraging so that we can get better prices, and doing some more
standardization so we know what we're getting more consistently, and
being able to have better services provided, have better oversight.

[ Sarah Kaczmarek: ] So I know that you have been looking into these
reform efforts for 15 years. Why hasn't much changed?

[ Tim DiNapoli: ] Well, I think fundamentally, as we mentioned in the
report, that there is a cultural difference that and cultural challenges
that DOD has yet to come to terms with and hasn't figured out a way to
overcome. And what I mean by that is, at the command level, where they
have the mission, the requirements, and the money, they are very
protective of what they do, and that's a good thing because they want to
achieve mission. They want to help the nation defend itself. They do not
want to have help from above, and so when it comes from senior
leadership at the Office of the Secretary of Defense, they say, thank
you, but we really want to do it ourselves. And I think the department
hasn't been able to come to grips with that, and so they're a top-down
approach, which is what the tried, was just not effective in kind of
embracing how the department actually works on a day-to-day basis.

[ Background Music ]

[ Sarah Kaczmarek: ] Given the difficulties of trying to reform DOD
contract services from a top-down approach, I wondered what GAO was
recommending to transform how DOD buys contract services.

[ Tim DiNapoli: ] So in the last two years, we have issued a number of
reports that had several recommendations, which, combined, I think will
help DOD achieve its objectives with transforming how we buy services.
Back in 2016, we had a report that said DOD needs to budget for services
more strategically, meaning now tell us what you're going to be doing
next year or what you're going to be doing 5 years from now. Very
consistent for what we do with major weapon systems. This year's report,
we talked about the need to step back, fundamentally reassess how these
key leadership positions are being instituted, both from an
organizational perspective as well as roles and responsibilities, as
well as the new process, which I briefly mentioned before -- the service
requirements review boards. They are mistimed and ill-suited to do what
they're intending to do. We recommended that they take that process,
which is supposed to validate requirements, move it earlier up in the
chain of command and in the process so they can help influence budgeting
decisions. Those three recommendations, which I think are consistent
with what DOD's intent is with regard to transforming services, we
believe can help make that transformation of services a reality.

[ Sarah Kaczmarek: ] Lastly, what do you believe is the key take-away
from your reporting on this issue over the years?

[ Tim DiNapoli: ] If you embrace the, what the private sector best
practices are and tailor them appropriately, we think you can transform
services, meet the war fighter's needs more efficiently, and potentially
save billions of dollars for both the department and for the taxpayer.

[ Sarah Kaczmarek: ] Thanks for listening to the Watchdog Report. To
hear more podcasts, subscribe to us on iTunes. For more from the
congressional watchdog, the U.S. Government Accountability Office, visit
us at GAO.gov.