What We Found
The Department of Defense has significantly mitigated some key contract management risks, particularly risks involving its acquisition workforce, but it should do more to address risks involving contracted services and operational contract support.
Since our 2019 High-Risk Report, our overall assessment of all five criteria remains unchanged for Department of Defense (DOD) Contract Management. DOD continues to demonstrate top leadership support for addressing challenges in its (1) acquisition workforce, (2) service acquisitions, and (3) operational contract support (OCS), which is defined as planning for and obtaining supplies, services, and construction from commercial sources in support of joint operations.
DOD has made significant progress addressing challenges with its acquisition workforce, and has met the four remaining criteria. Consequently, we are removing Acquisition Workforce as a specific element within the DOD Contract Management high-risk area. Work still remains to address criteria for service acquisitions and operational contract support.
Over the years since we added this area to our High-Risk List, we have made numerous recommendations related to this high-risk issue, two of which were made since the last high-risk update in March 2019. As of December 2020, 13 recommendations related to this area were open.
Acquisition Workforce (Segment removed)
Since our 2019 High-Risk Report, DOD has continued to meet the criteria of leadership commitment for its acquisition workforce and now meets the other four criteria. DOD’s progress in addressing the shortfalls in acquisition workforce that it identified more than a decade ago enable us to remove this segment from our High-Risk List.
A skilled acquisition workforce is vital to maintaining military readiness, increasing DOD’s buying power, achieving savings, and meeting emerging challenges and complexities. Therefore, it remains essential that DOD continue its efforts to attract, hire, sustain, and improve the defense acquisition workforce, and we will continue to monitor these efforts.
Leadership commitment: met. DOD continues to demonstrate leadership commitment to its acquisition workforce.
DOD’s Office of Human Capital Initiatives remains the focal point for acquisition workforce issues within DOD and works with the military departments to meet workforce needs. Since 2008, this office, in coordination with the Defense Acquisition University, has managed over $5.2 billion in the Defense Acquisition Workforce Development Fund to help DOD hire, train, and retain a workforce that grew from around 126,000 in fiscal year 2008 to nearly 183,000 in fiscal year 2020.
Currently the office is overseeing implementation of a new initiative announced by the Under Secretary of Defense for Acquisition and Sustainment in September 2020, referred to as “Back-to-Basics for the Defense Acquisition Workforce.”
Through this initiative, DOD plans to modernize its approach for certifying the capabilities of its acquisition workforce and to institute a new talent management framework. An official from the Office of Human Capital Initiatives stated that the office’s future role will be to advocate for the acquisition workforce, while the military departments will continue to be responsible for hiring, training, and equipping their own personnel.
Capacity: met. DOD increased the size of its acquisition workforce beyond its initial 2010 target of 147,000 by fiscal year 2015, to nearly 183,000 as of fiscal year 2020.
The larger workforce has allowed DOD to bolster support for critical functions, such as program management, engineering, and contracting, as well as to increase the percentage of acquisition workforce professionals that are in the early and middle stages of their careers to help prevent a sudden loss of talent when senior members of the workforce retire.
Additionally, DOD continues to take steps to ensure that the acquisition workforce has the requisite skills, tools, and training to perform key tasks. For example, in August 2019, DOD completed initial competency assessments of each of its career fields, and some follow-on assessments also have been completed. In response to defense acquisition workforce requirements in the National Defense Authorization Act for Fiscal Year 2020, DOD has started work on transforming the credentialing process for the acquisition workforce by career field.
An official from the Office of Human Capital Initiatives stated that DOD is also developing plans to implement a Civilian Acquisition Training Corps program at selected universities to help create a pipeline of acquisition professionals. In addition, the military departments have largely implemented the eight recommendations we made in our February 2018 report to improve how they train, mentor, retain, and ultimately select program managers—a critical acquisition career field—based upon practices used by leading organizations.
Action plan: met. DOD followed through on its plans to increase the size of its acquisition workforce and to improve the professionalism of the workforce based on education and training standards it established. The latest strategic plan that DOD issued in October 2016 indicated that DOD planned to
- sustain the acquisition workforce size, factoring in workload demand and requirements;
- ensure that its personnel continue to increase their professionalism; and
- continue to expand talent management programs to include recruitment, hiring, training, development, recognition, and retention incentives by using the Defense Acquisition Workforce Development Fund and other appropriate tools.
Since 2016, DOD has demonstrated that it has been able to sustain these efforts and even increase the size of the workforce.
Monitoring: met. DOD continues to track workforce metrics on a quarterly basis, including the overall size of the workforce, the number of personnel by career field, attrition rates, the level of education attained, and the percent that met training requirements, among others. DOD’s goals for the future, as stated in its September 2020 Back to Basics plan, include achieving streamlined and restructured certification requirements, identifying prioritized credentials, and providing for continuous learning.
Demonstrated progress: met. Since 2010, DOD has significantly rebuilt the acquisition workforce as measured by the number of personnel in acquisition career fields, their experience level, education level, and training certification. Metrics tracked by DOD provide evidence that DOD is more than sustaining the size of the acquisition workforce and continues to demonstrate commitment to improving the quality of the acquisition workforce.
DOD’s progress is commendable. However, it does not mean that DOD has eliminated all risk associated with its acquisition workforce. For example, in our DOD Weapon System high-risk area, we identify specific challenges in recruiting, hiring, training, and sustaining test and evaluation staff for cybersecurity and a lack of expertise in software development that adversely affect DOD’s ability to deliver capabilities to the warfighter.
Ratings for this segment have changed since our 2019 High-Risk Report. DOD has partially met the previously unmet action plan criterion. In addition, DOD continues to partially meet the capacity, monitoring, and demonstrated progress criteria. DOD continues to meet the criterion for leadership commitment.
Leadership commitment: met. DOD has demonstrated sustained leadership commitment by revising its service acquisitions instruction in January 2020. The revised instruction updated the Service Requirements Review Board (SRRB) process for reviewing, validating, approving, and verifying requirements for service acquisitions at both the DOD and the component level.
DOD officials told us that department leaders plan to revise the instruction further to account for recent changes to DOD’s overall acquisition framework.
Capacity: partially met. DOD has responded to a recommendation we made in August 2017 to address capacity shortfalls hindering DOD’s management of service acquisitions, but it is too early to assess the effectiveness of DOD’s response. In August 2017, we recommended DOD reassess leadership positions intended to strategically manage service acquisitions by portfolio because we found that the individuals in those positions had limited capacity.
DOD’s revised service acquisitions instruction changed DOD’s management structure and aligned the leadership positions with the Office of Management and Budget’s (OMB) category management efforts, which are intended to help agencies manage entire categories of spending across the government more like a single enterprise. In 2021, DOD plans to issue additional guidance on how the department can use category management to better manage service acquisitions. However, DOD has not yet demonstrated that individuals in key leadership positions have the capacity necessary to effectively implement this guidance.
Action plan: partially met. The January 2020 service acquisitions instruction identified a number of actions that DOD intends to take to further enhance its ability to manage service acquisitions. For example, the instruction updated the process through which the SRRBs can support budget planning. In 2017, we reported that the SRRBs had limited ability to inform budgeting decisions or support trade-off decisions within and across portfolios of service acquisitions.
In 2016, we recommended DOD include its projected spending on service acquisitions in its future-years defense plan. DOD officials have reported that the department may issue additional guidance in October 2021 identifying how components should collect and report information on service acquisitions beyond the budget year. Once issued, this guidance may address our 2016 recommendation and further enhance DOD’s ability to manage current and future service acquisitions.
Monitoring: partially met. Since our 2019 assessment, DOD has taken steps to collect data and develop metrics to monitor service acquisitions, but additional action is needed. For example, DOD’s January 2020 service acquisition instruction established that the department will use OMB’s existing category management metrics to monitor management of service acquisitions.
Additionally, DOD officials told us the department has used the inventory of contracted services to identify capability gaps. This use of the inventory of contracted services constitutes progress since 2016, when we reported that DOD was not using the inventory to help inform workforce and budget decisions, as statutorily required. However, DOD has not yet established how it will monitor implementation of the SRRB process outlined in the new service acquisitions instruction.
Demonstrated progress: partially met. In fiscal years 2019 and 2020, DOD exceeded OMB’s category management targets for contract obligations considered to be strategically managed. However, DOD will not be able to fully demonstrate progress in how it manages service acquisitions through the Future Years Defense Program until the department issues guidance for collecting and reporting on how service acquisitions will be used beyond the budget year.
Operational Contract Support
For this segment, the ratings remain unchanged from our 2019 High-Risk Report.
Leadership commitment: met. DOD continues to demonstrate sustained commitment and strong leadership support in addressing OCS issues. For example, DOD has designated senior leaders within the Office of the Deputy Assistant Secretary of Defense (Logistics) for both OCS and vendor threat mitigation (previously known as vendor vetting).
DOD has also issued and updated a directive delineating roles and responsibilities for OCS planning and execution throughout the department. DOD also has maintained and expanded the role of the Functional Capabilities Integration Board, which serves as the senior governance forum for OCS issues. DOD revised and expanded the board’s charter in March 2020.
Capacity: partially met. DOD continues to face challenges in OCS capability shortfalls that create risk to operational effectiveness, timelines, and resource expenditures and prevent DOD from reaching full OCS capacity.
However, efforts are under way to address these OCS capability shortfalls. For example, DOD has completed four out of 15 actions identified in the August 2018 Joint Requirements Oversight Council memorandum aimed at improving policy, education, personnel, and force structure analysis, and officials stated in December 2020 that the department expects to close four additional actions by April 2021. DOD has also completed a functional competency assessment model that identified nine OCS competency skills for DOD civilians. According to DOD officials, the model will be used to inform education and training, hiring practices, and other manpower decisions. DOD completed and validated this model in November 2019 and expects to finalize it through publication in 2021.
Going forward, it will also be important for DOD to demonstrate that capacity will not diminish at the combatant commands as a result of the dissolution of the Joint Contingency Acquisitions Support Office in 2020. Planners from that organization have for several years been embedded in the commands to help develop OCS annexes to operational plans, and it will be important for DOD to ensure this OCS capability is not lost.
Action plan: met. In October 2019, DOD issued its seventh OCS Action Plan, which is organized around five core areas to address capability shortfalls in training and education, lessons learned, policy changes and emerging requirements. The action plan is DOD’s primary mechanism for measuring progress in these core areas.
Monitoring: met. DOD maintains several formal and informal groups to continue to monitor OCS progress. These include the Functional Capabilities Integration Board senior executive forum and Council of Colonels, the Vendor Threat Mitigation Working Group, and the OCS Data and Information Group. The groups meet regularly and are cochaired by senior officials in the Office of the Secretary of Defense and Joint Staff. Officials in these groups track DOD’s progress toward addressing OCS capability shortfalls identified in the annual OCS Action Plans.
Demonstrated progress: partially met. DOD continues to make progress in addressing recommendations we have previously identified as high priority. For example, in response to our December 2018 recommendation, DOD has developed a draft directive to provide comprehensive, department-wide guidance on vendor threat mitigation. At the same time, it has extended its interim directive-type memorandum to use until the directive is issued. In addition, two combatant commands (Africa and Indo-Pacific Commands) have developed and published command-specific OCS guidance.
However, after several years, DOD has still not issued its revised keystone instruction detailing how OCS should be integrated into plans and training, among other things. Senior DOD officials expect to issue the instruction by the end of March 2021. Additionally, DOD has not issued vendor threat mitigation guidance that will formalize DOD’s process for assessing and responding to risks posed by vendors who support DOD operations outside the United States. DOD officials estimated that this guidance will be issued by June 2021.
DOD obligates hundreds of billions of dollars annually on contracts for goods and services. We added DOD’s Contract Management to our High-Risk List in 1992 and have identified three major areas of challenges: Acquisition Workforce, Service Acquisitions, and Operational Contract Support.
DOD reduced the size of its acquisition workforce in the mid-1990s as defense budgets decreased. Amid concerns about skill gaps and a growing reliance on contractors, DOD has been rebuilding its workforce since 2009. A skilled acquisition workforce is vital to maintaining military readiness, increasing DOD’s buying power, and achieving savings.
DOD’s long-standing challenges in managing service contracts are evident in its difficulties clearly defining requirements, a fragmented and uncoordinated approach to acquiring services, and limited information on what the department plans to spend on specific types of contracted services in its budget forecasts.
DOD has spent billions of dollars on contractors to support military activities it conducts around the world. Since 2010, we have reported that DOD has faced difficulties in identifying capability gaps, developing guidance, and integrating operational contractor support into plans and training.
As of November 2020, six recommendations related to this high-risk area had not been implemented. To improve the acquisition of services, DOD needs to, among other things,
- issue guidance on how DOD intends to use category management to help better manage service acquisitions, which it intended to do in 2021, and demonstrate service acquisition and category management leaders have the capacity to effectively implement this guidance; and
- issue and implement guidance identifying how components should collect and report information on service acquisitions beyond the budget year.
Operational Contract Support
As of November 2020, seven recommendations related to this high-risk area had not been implemented. To enhance DOD’s ability to effectively manage OCS for current and future operations, DOD needs to, among other things,
- address identified OCS capability shortfalls;
- issue comprehensive vendor threat mitigation guidance; and
- issue the revised instruction that integrates OCS throughout the department.