Accessible Version

CIVILIAN AND 

CONTRACTOR 

WORKFORCES

Complete Information 

Needed to Assess 

DOD’s Progress for 

Reductions and 

Associated Savings

Report to Congressional Committees

December 2015

GAO-16-172

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-16-172, a report to 

congressional committees

December 2015

CIVILIAN AND CONTRACTOR WORKFORCES

Complete Information Needed to Assess DOD’s 

Progress for Reductions and Associated Savings

Why GAO Did This Study

With long-term fiscal challenges likely 

to continue, DOD must operate 

strategically and efficiently, including 

through cost-effective management of 

its human capital. Section 955 of the 

NDAA for Fiscal Year 2013 required 

DOD to, among other things, develop 

and implement a plan to achieve 

savings in the total funding for civilian 

and contractor workforces from fiscal 

years 2012 through 2017. 

Section 955 also includes a provision 

that GAO review each of the Section 

955 reports DOD submits to Congress 

to determine whether the required 

savings are being achieved and 

whether the plan is being implemented 

consistently with workforcemanagement laws. 

This report addresses the extent to 

which (1) DOD, as shown in its 

September 2014 and February 2015 

reports, is meeting the requirements 

specified in section 955 and (2) has 

achieved the cost savings required 

under section 955 and identified the 

savings in these reports. GAO 

reviewed the two reports DOD has 

submitted to Congress and supporting 

documents and interviewed cognizant 

officials.

What GAO Recommends

GAO recommends that the Secretary 

of Defense fully address ongoing 

section 955 requirements in its next 

two status reports to Congress. DOD 

generally concurred with the 

recommendation.

What GAO Found

The Department of Defense’s (DOD) September 2014 and February 2015 

reports did not fully address most statutory requirements identified in section 955 

of the National Defense Authorization Act (NDAA) for fiscal year 2013. 

Specifically, DOD partially addressed three statutory requirements and did not 

address three statutory requirements. For example, DOD’s September 2014 

report to Congress partially addressed the requirement to develop and implement 

a plan for achieving savings by outlining reductions in its civilian and contractor 

workforces, but DOD does not describe a process for implementing the planned 

reductions. Also, DOD did not address savings the department intends to 

achieve through reductions in the number of military, civilian, and contractor 

personnel. Instead the report outlined reductions in full-time equivalent (FTE) 

positions, which may not equate to savings, and did not outline savings in 

funding for the contractor workforce beyond fiscal year 2015. Without this 

information, Congress has limited assurance on how the department will achieve 

required savings and whether the savings will be achieved in a manner that is 

consistent with workforce-management laws. 

Moreover, according to its reports, DOD has made civilian personnel reductions; 

however, GAO’s analysis indicates that the reductions may not achieve the 

savings required by section 955, and DOD has not provided an explanation of 

the reasons for the projected shortfall in achieved savings in the contractor 

workforce. Section 955 requires DOD to achieve savings in the cost of the civilian 

and contractor workforces between fiscal year 2012 and fiscal year 2017 at least 

as large in percentage terms as the savings in military basic pay resulting from 

reductions in military end strength over the same period. In its section 955 

reports, DOD reports on reductions to civilian FTEs, but does not report the 

civilian personnel savings associated with the reductions. Civilian FTEs by 

themselves, however, may not be reliable measures of the cost of the civilian 

workforce. For instance, GAO’s analysis shows that from fiscal years 2012 

through 2016, civilian FTEs declined by 3.3 percent, but civilian personnel costs 

declined by only 0.9 percent adjusted for inflation. Because DOD’s focus has 

been on making and reporting on FTE reductions, DOD and Congress lack 

information on the extent to which the reductions will achieve savings, and DOD 

may risk falling short of the statutory requirement for cost savings in the civilian 

workforce. In addition, in its fiscal year 2016 budget, DOD shows a planned 

increase in spending on the contractor workforce that, if carried out, will mean 

that about half the reduction to contractor workforce spending that DOD has 

identified as its goal through fiscal 2017 remains to be achieved. Further, GAO’s 

analysis shows that DOD would need to reduce its spending on the contractor 

workforce by about $4.1 billion from fiscal year 2012 through fiscal year 2017 in 

order to match the approximately 7.0 percent reduction in military average 

strength over the same period. DOD has not provided an explanation of the 

reasons for the shortfall as required by section 955, in part because complying 

with other statutory requirements has been a main focus of DOD’s efforts to limit 

spending on the contractor workforce. Without this information, it is uncertain 

whether DOD will achieve the required section 955 savings in contractor 

spending, which hinders Congress’s insight into what additional actions are 

required to achieve this goal.

View GAO-16-172. For more information, 

contact Brenda S. Farrell at (202) 512-3604 or 

farrellb@gao.gov
Letter 1

Page i GAO-16-172 DOD Civilian and Contractor Workforces

Background 5

DOD’s Reports Did Not Fully Address Most of the Statutory 

Requirements 8

Achieving Required Cost Savings in Civilian Workforce Is 

Uncertain Due to Incomplete Reporting by DOD, and Planned 

Increases in Contract Workforce Spending Pose a Challenge to 

Achieving Required Savings 10

Conclusions 16

Recommendations for Executive Action 17

Agency Comments 17

Appendix I: Scope and Methodology 20

Appendix II: Comments from the Department of Defense 23

Appendix III: GAO Contact and Staff Acknowledgments 26

GAO Contact 26

Staff Acknowledgments 26

Appendix IV: Accessible Data 27

Agency Comment Letter 27

Data Tables 30

Tables

Table 1: DOD-Reported Reductions to Civilian, Contractor, and Military 

Workforces from Fiscal Year (FY) 2012 through 2017 7

Table 2: GAO’s Assessment of Statutory Requirements Addressed in 

DOD’s Reports on Section 955 of the National Defense 

Authorization Act for Fiscal Year 2013 8

Table 3: Changes in DOD Personnel and Related Costs Changes, Fiscal 

Years (FY) 2012–2016 12

Data Table for Figure 1: DOD Progress toward Its Goal for Contractor 

Workforce Reductions as of February 2015 Status Report 30

Figure

Figure 1: DOD Progress toward Its Goal for Contractor Workforce 

Reductions as of February 2015 Status Report 15

Contents
Page ii GAO-16-172 DOD Civilian and Contractor Workforces

Abbreviations

DOD Department of Defense

FTE Full-time Equivalent

OUSD Office of the Under Secretary of Defense

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Page 1 GAO-16-172 DOD Civilian and Contractor Workforces

441 G St. N.W.

Washington, DC 20548

December 23, 2015

Congressional Committees

The Department of Defense (DOD) is the nation’s largest employer, with 

a total workforce consisting of nearly 2.1 million active-duty and reserve 

military personnel, 756,000 full-time equivalent (FTE) civilian personnel, 

and 641,000 FTE service contractor personnel.1 DOD’s civilian and 

contractor personnel perform a wide variety of duties and responsibilities, 

including mission-essential combat support functions such as logistics support 

and maintenance. With long-term fiscal challenges likely to continue, DOD 

must operate strategically and efficiently, including through cost-effective 

management of its human capital.

Our prior work has emphasized the importance of DOD strategically 

determining, as part of its workforce planning, the appropriate workforce 

mix to perform the missions of the department, along with assessing 

personnel costs and effects on readiness. In May 2013, we found that 

DOD had not taken a holistic approach to managing its workforce 

requirements to achieve the appropriate balance using all three 

components—military, civilian, and contractor—of its total workforce, and 

to prioritize the achievement of a workforce sufficiently sized and of the 

appropriate mix to carry out DOD’s mission.2 We recommended that DOD 

revise its workforce policies and procedures to address the determination 

of the appropriate workforce mix. DOD partially concurred, stating that it 

was in the process of issuing guidance to its military, civilian, and 

contractor manpower management, and did not believe additional 

direction was necessary at the time of the report. As of October 2015, 

DOD has not taken action to fully implement the recommendation.

In the context of DOD balancing its civilian and contractor personnel with 

declines in military end strength, section 955 of the National Defense 

 

1We have previously found that DOD’s contractor FTE estimates have significant limitations and 

do not accurately reflect the number of contractors providing services to DOD. See GAO, Human 

Capital: Additional Steps Needed to Help Determine the Right Size and Composition of 

DOD’s Total Workforce, GAO-13-470 (Washington, D.C.: May 29, 2013).

2GAO-13-470.

Letter
Authorization Act (NDAA) for Fiscal Year 2013

Page 2 GAO-16-172 DOD Civilian and Contractor Workforces

3

required the Secretary of 

Defense to, among other things, develop and implement an efficiencies plan to 

achieve savings in the total funding for civilian and contractor workforces that 

are not less, as a percentage, than savings in funding for basic military 

personnel pay resulting from reductions in military end strengths from 

fiscal years 2012 through 2017. Section 955 also required the Secretary 

of Defense to issue a series of reports on DOD’s implementation of that 

plan, and includes a provision that we review each of the reports DOD 

submits to Congress to determine whether the required savings in the 

civilian and contractor workforces are being achieved and whether the 

plan is being implemented in a manner consistent with sourcing and 

workforce-management laws. This report addresses the extent to which 

(1) DOD, as indicated in its initial September 2014 report and February 

2015 status report accompanying the fiscal year 2016 budget request, is 

meeting the requirements specified in section 955, and (2) has achieved 

the cost savings specified by section 955 and has identified the savings in 

these reports.

To determine the extent to which DOD, as indicated in its reports, is 

meeting the requirements specified in section 955, we analyzed DOD’s 

September 2014 and February 2015 reports as well as related 

documentation, and compared them to the requirements in section 955. 

As of December 2015, these were the only two reports DOD had 

submitted. To conduct this assessment, two analysts independently 

reviewed DOD’s September 2014 report using a scorecard methodology 

and assigned a score as to whether the document (1) addresses, (2) 

partially addresses, or (3) does not address the statutory requirements.4

The analysts then met to resolve any differences in their respective independent 

analyses, and the final assessment was reviewed by both our Office of General 

Counsel and team methodologist. In addition, we reviewed the September 2014 

report and related documentation using the same methodology to assess 

the extent to which they contain information regarding compliance with 

 

3

Pub. L. No. 112-239, § 955 (2013).

4We assigned a rating of “addresses” if all elements of a statutory requirement were cited, even if 

specificity and details could be improved upon. We assigned a rating of “partially addresses” if 

DOD addressed one or more of the elements of a statutory requirement but did not 

address all of the elements of the requirement. We assigned a rating of “does not 

address” when elements of a characteristic were not explicitly cited or discussed or any 

implicit references were either too vague or too general to be useful.
the workforce management laws specified in the act.

Page 3 GAO-16-172 DOD Civilian and Contractor Workforces

5 We also interviewed 

DOD and military service officials to determine the organizations, 

information, and assumptions involved in preparing the section 955 

reports, and what guidance was provided to DOD and the military 

services to implement the savings consistent with the workforcemanagement laws specified in the act.

To determine the extent to which DOD has achieved the cost savings 

required under section 955 and identified the savings in the reports it has 

submitted to Congress, we reviewed and analyzed the civilian and 

contractor workforce reductions identified in these reports and associated 

budget documents. To assess DOD’s progress towards its goal for civilian 

FTE reduction, we calculated, based on DOD’s February 2015 report, (1) 

the FTE reduction that occurred from fiscal year 2012 through fiscal year 

2014, the most recent year for which actual levels are available, and (2) 

the additional reduction that DOD has planned through fiscal year 2017. 

We then compared the percentage reduction in civilian FTEs from fiscal 

year 2012 to fiscal year 2017 to the percent reduction in military average 

strength over the same period.

To assess DOD’s progress toward its goal for the contractor workforces, 

we calculated (1) the reduction that would be required for DOD to achieve 

its goal of matching the reduction in contractor workforce spending to the 

 

5The workforce-management laws against which we evaluated DOD’s reports include sections 129, 

129a, 2330a, 2461, and 2463 of Title 10 of the United States Code. Collectively, these laws 

establish a number of requirements for DOD’s management of its total workforce. Section 

129 outlines certain restrictions on DOD’s management of civilian personnel, including a 

requirement that the number of civilian personnel shall be managed solely on the basis of 

and consistent with total-force management policies and procedures established under 

section 129a, workload requirements, and funds made available to department each fiscal 

year. Section 129a governs DOD’s general policy for total-force management, and 

requires the Secretary of Defense to establish policies and procedures for determining the 

most appropriate and cost-efficient mix of military, civilian, and contractor personnel to 

perform the mission of the department, among other things. Section 2330a requires DOD 

to submit an annual inventory of activities performed pursuant to contracts for services, 

which, among other things, is required to include information concerning the number of 

contractor employees, expressed as full-time equivalents (FTE), subject to certain 

exceptions. Section 2461 requires DOD to perform a public–private competition prior to 

converting a function from civilian to contractor performance; however, there is currently a 

statutory moratorium on performing such competitions. Section 2463 states that the Under 

Secretary of Defense for Personnel and Readiness shall implement guidelines and 

procedures to ensure that consideration is given to using DOD civilian employees to, 

among other things, perform functions that are performed by contractors and could be 

performed by DOD civilian employees.
reduction in military average strength from fiscal year 2012 through fiscal 

year 2017 that DOD included in its February 2015 report; (2) the 

reduction that has occurred from fiscal year 2012 through fiscal year 

2014, the most recent year for which actual levels are available; (3) the 

increase that DOD has planned through fiscal year 2016, the latest year 

for which DOD provides contractor workforce spending levels; and (4) any 

shortfall between the required reductions and DOD’s actual and planned 

reductions through fiscal year 2017.

Page 4 GAO-16-172 DOD Civilian and Contractor Workforces

6 We also interviewed DOD and military 

service officials to obtain an understanding of why they selected the savings and 

reductions goals identified in the reports and the information upon which the 

goals are based. In addition, to assess the extent to which reductions in 

civilian FTEs may result in the required savings to the civilian workforce, 

as well as the extent to which reductions in military average strength 

result in a similar reduction to military basic pay, we reviewed DOD 

budget data on each data series for fiscal years 2012 through 2016 and 

calculated (1) the annual percentage change from year to year, and (2) 

the overall percentage change during this period, and reviewed these 

relationships.

We determined that the data contained in DOD’s reports and related 

budget materials were sufficiently reliable for the purpose of reporting on 

and analyzing reductions to the civilian workforces in the context of data 

as presented by DOD. Specifically, we reviewed our previous reports that 

used workforce data, reviewed DOD instructions on the preparation and 

entering of these data, compared military and civilian personnel and 

funding to other data published by DOD, and discussed the reliability of 

the data with Office of the Under Secretary of Defense (Comptroller) 

(OUSD Comptroller) officials. For more information on our scope and 

methodology, see appendix I.

We conducted this performance audit from February 2015 to December 

2015 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

 

6As discussed below, DOD states in both its reports that it does not project contract services 

funding beyond the budget year. As a result, we use the gap between DOD’s fiscal year 2016 

budgeted level and the required reduction according to our analysis for the purpose of 

identifying any shortfall. 
that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

In January 2013, Congress enacted the NDAA for Fiscal Year 2013.

Page 5 GAO-16-172 DOD Civilian and Contractor Workforces

7

Section 955 of the act (section 955) outlines statutory requirements for the 

Secretary of Defense to develop a plan to achieve savings in the civilian 

personnel and service contractor workforces of DOD. The act required 

the Secretary of Defense to

· develop and implement a plan to achieve savings in the total funding 

for civilian and contractor workforces that are not less, as a 

percentage, than savings in funding for basic military personnel pay 

resulting from reductions in military end strengths from fiscal years 

2012 through 2017;

· ensure that the plan is consistent with policies and procedures 

required by 10 U.S.C. § 129a, and to ensure that the savings are not 

achieved through unjustified transfers of functions between or among 

the military, civilian, and service contractor personnel workforces of 

DOD, consistent with authorities available to the department under 

sections 129a, 2330a, 2461, and 2463 of title 10 of the United States 

Code;

· provide an initial report including a comprehensive description of the 

plan to achieve savings no later than 120 days after enactment of the 

NDAA;

· provide status reports describing the implementation of the plan in the 

prior year as part of the budget submitted by the President to 

Congress for each of fiscal years 2015 through 2018;

· in each status report, provide a summary of savings achieved through 

personnel reductions and the number of military, civilian, and 

contractor personnel reduced; and

 

7

Pub. L. No. 112-239, § 955 (2013).

Background

Section 955 Statutory 

Requirements
· in each status report include an explanation where any savings fall 

short of the annual target.

DOD has submitted two reports to Congress in response to section 955. 

In September 2014, DOD issued its first report in response to section 

955. DOD refers to the September 2014 report as its initial report. In 

February 2015, DOD provided a status report in budget justification 

materials that accompanied the President’s budget request for fiscal year 

2016. Both reports were developed by the Office of the Under Secretary 

of Defense (Comptroller) (OUSD Comptroller), which is the department’s 

principal advisor on budgetary and financial matters and has 

responsibilities for developing and executing DOD’s annual budget. 

Section 955 also requires that DOD’s plan be consistent with policies and 

procedures required under section 129a of title 10 of the United States 

Code. According to 10 U.S.C. § 129a, the Under Secretary of Defense for 

Personnel and Readiness (USD P&R) has overall responsibility for the 

development of guidance on the implementation of policies and 

procedures for determining the most appropriate and cost-efficient mix of 

military, civilian, and contractor personnel to perform the mission of DOD. 

In addition, USD P&R is, among other things, to provide oversight policy, 

assess the size and shaping of the civilian workforce, and develop 

policies, plans, and programs to ensure the readiness of the total force.

DOD’s September 2014 report outlined reductions achieved in civilian 

personnel for fiscal years 2012 and 2013 and planned reductions for 

fiscal years 2014 through 2019. The reductions in civilian personnel are 

further grouped by military component and civilian hiring status of direct, 

reimbursable, or foreign. The report also outlines reductions achieved in 

military personnel using military average strength by active, reserve, and 

National Guard status for fiscal years 2012 and 2013 and planned 

reductions for these personnel for fiscal years 2014 through 2019. 

Additionally, the report outlines reductions achieved in funding for 

contracted services for fiscal years 2012 and 2013 and planned 

reductions for contracted services for fiscal year 2014 and 2015.

Section 955 gave DOD authority to exempt certain civilian and contractor 

functions from reductions. Most of the September 2014 report provides 

details on these exclusions—for fiscal years 2012 through 2017. As a 

result, about 70 percent of the civilian workforce was excluded from the 

savings goals over the period. The exclusions are categorized by 

personnel functions such as depots, medical, and shipyards as well as by 

military component and the department’s defense-wide agencies such as 

Page 6 GAO-16-172 DOD Civilian and Contractor Workforces

DOD’s Reports and Roles 

and Responsibilities
the Defense Commissary Agency and Defense Contract Audit Agency.

Similar to the September 2014 report, the February 2015 report that was 

included in budget justification materials accompanying the President’s 

budget for fiscal year 2016 outlines achieved and proposed civilian 

personnel reductions for fiscal years 2014 through 2020 and reductions to 

contractor personnel spending through fiscal year 2016. In addition, the 

proposed reductions in civilian personnel are further categorized by hiring 

status, as in the initial report provided in September 2014. Further the 

February 2015 report details exclusions taken by the department based 

on the categories identified in the initial report—personnel functions, 

military components, and DOD’s defense-wide agencies.

Page 7 GAO-16-172 DOD Civilian and Contractor Workforces

8 See table 1 for an 

overall summary of the reductions reported by DOD for each workforce.

Table 1: DOD-Reported Reductions to Civilian, Contractor, and Military Workforces from Fiscal Year (FY) 2012 through 2017 

Category FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

Percentage 

change, 

FY2012 to 

FY2017 

(percent)

September 2014 

reporta

Civilian (full-time 

equivalents [FTE] less

exclusions)

294,194 274,134 282,893 272,237 271,067 268,155 -8.9%

Contractor (dollars in 

billions)

57.8 55.7 52.8 53.1 b b-8.2b

Military (average 

strength)

2,256,495 2,228,469 2,199,048 2,155,250 2,106,550 2,071,900 -8.2

February 2015 

reporta

Civilian (FTEs less

exclusions)c

237,954 220,012 222,506 222,020 221,948 221,717 -6.8

Contractor (dollars in 

billions)

57.8 55.7 54.6 51.9 55.8 b-3.5b

Military (average 

strength)

2,256,495 2,228,469 2,189,779 2,145,021 2,121,840 2,098,250 -7.0

Source: Department of Defense (DOD). | GAO-16-172

Note: Data are from GAO summary of DOD section 955 reports and related documents.

a

According to DOD’s September 2014 Report, FY2012 and FY2013 are actual levels, FY2014 are 

enacted, and FY2015 through FY2017 are planned. According to the February 2015 Report, FY2012 

through FY2014 are actual levels, FY2015 are enacted, and FY2016 and FY2017 are planned. 

Values for contractor workforces for February 2015 report are drawn from February 2015 report, 

September 2014 report, and related documents.

 

8Working-capital funds are revolving funds established to finance inventories of supplies and other 

stores, or to provide working capital for industrial-type activities.
bDOD has stated that it does not project contract services funding beyond the budget year, and 

therefore only provides contract spending through the budget year in both of its reports. Because of 

this, the percent change calculated for spending on the contractor workforce is between fiscal year 

2012 and the latest year for which DOD provides data.

cDOD’s February 2015 Report incorporated additional civilian exclusions, which reduced the number 

of civilian FTEs less exclusions.

DOD’s September 2014 and February 2015 reports did not fully address 

most statutory requirements related to the civilian and contractor 

workforces. Specifically, of the six statutory requirements, DOD partially 

addressed three statutory requirements and did not address three 

statutory requirements. Table 1 summarizes the statutory requirements 

and our assessment of the extent to which DOD’s reports addressed 

these requirements.

Table 2: GAO’s Assessment of Statutory Requirements Addressed in DOD’s Reports on Section 955 of the National Defense 

Page 8 GAO-16-172 DOD Civilian and Contractor Workforces

Authorization Act for Fiscal Year 2013

Statutory requirements from section 955 of the 

National Defense Authorization Act (NDAA) for 

Fiscal Year 2013

GAO 

assessment GAO comments

Develop and implement a plan to achieve savings 

for the civilian workforce and contractor workforce 

that are not less, as a percentage, than savings in 

funding for basic military personnel pay resulting 

from reductions in military end strengths from 

fiscal years 2012 through 2017

Partially 

addressed

The initial report, submitted to Congress by the Department of 

Defense (DOD) in September 2014, outlines planned reductions in 

civilian personnel from fiscal year 2012 through 2019 in terms of 

full-time equivalent (FTE) positions, but does not describe a 

process for implementing the planned reductions to achieve 

savings. Further, the report does not provide information on the 

savings achieved from the reductions as required, and provides 

information on funding for the contractor workforce through fiscal 

year 2015 but does not project funding beyond that year.

Ensure plan is consistent with policies and 

procedures, implementing section 129a of title 10 

of the United States Code. Additionally, the 

Secretary of Defense is to ensure that the savings 

are not achieved through unjustified transfers of 

functions between or among the military, civilian, 

and service contractor personnel workforces of 

DOD, consistent with authorities available to the 

department under sections 129a, 2330a, 2461, 

and 2463 of title 10, United States Code

Partially 

addressed 

DOD’s September 2014 report generally refers to elements present 

in workforce management laws such as defining the right mix of 

military personnel, civilians, and contractors needed to reflect new 

strategic priorities. However, the report does not provide any detail 

on how workforce savings are going to be achieved in a manner 

consistent with workforce-management laws and implementing 

policies and procedures.

Status reports to be included in the President’s 

budget request for each fiscal year from 2015 

through 2018 describing the implementation of the 

plan in the prior year

Partially 

addressed

The President’s budget request for fiscal year 2015 was submitted 

to Congress in March 2014, but DOD’s initial report was submitted 

in September 2014, or 6 months after the submission of the budget 

request. The status report for fiscal year 2016 was included in the 

President’s budget request submitted in February 2015.

Provides initial report, including a comprehensive 

description of the plan, no later than 120 days 

after enactment of act

Not 

addressed

DOD did not address this requirement, submitting its initial report in 

September 2014, or about 16 months after the May 2013 due date. 

The initial report also did not include a comprehensive description 

of DOD’s plan.

DOD’s Reports Did 

Not Fully Address 

Most of the Statutory 

Requirements
Page 9 GAO-16-172 DOD Civilian and Contractor Workforces

Statutory requirements from section 955 of the 

National Defense Authorization Act (NDAA) for 

Fiscal Year 2013

GAO 

assessment GAO comments

In each status report, provide a summary of the 

savings achieved through personnel reductions 

and the number of military, civilian, and contractor 

personnel reduced

Not 

addressed

DOD’s September 2014 and February 2015 reports do not include 

information that demonstrates that savings goals are being 

achieved for the civilian and contractor workforces. The reports do 

not provide savings for the civilian workforce but instead outline 

planned reductions in FTE positions. In addition, the 2014 and 

2015 reports do not outline savings in funding for the contractor 

workforce beyond fiscal year 2015 and fiscal year 2016, 

respectively. Further, DOD compares savings in each workforce to 

reductions in military average strength levels, not military basic 

pay.a

In each status report, include an explanation 

where any savings fall short of the annual target

Not 

addressed

DOD’s February 2015 report shows a shortfall in savings for 

contractor personnel but does not provide an explanation for this 

shortfall.

Source: GAO analysis of DOD data. | GAO-16-172

Note: This assessment is based on the review of DOD’s September 2014 and February 2015 section 

955 reports.

a

Basic pay is the primary means of compensating members of the armed forces. With certain 

exceptions, every member is entitled to basic pay while on active duty.

During our discussions with OUSD Comptroller officials, they 

acknowledged that both reports did not fully address the requirements of 

section 955. Specifically, these officials stated that the reports did not 

include a comprehensive description of the implementation plan for the 

reductions, that they did not include savings achieved in total funding for 

civilian and contractor personnel, and that no specific actions were taken 

to ensure implementation would be consistent with workforce 

management laws. These officials explained that they did not fully 

address all of the requirements because they had to balance meeting the 

section 955 requirements with other competing priorities including 

completing the President’s budget requests for fiscal year 2015 and 2016.

While DOD developed a plan for reductions in the civilian workforce, it did 

not provide details to understand how these reductions would be 

achieved or any information demonstrating that the goals were being 

achieved. As a result, one of the deadlines for the requirements—

providing an initial report, including a comprehensive description of the 

plan, no later than 120 days after enactment of Act—has passed, and 

Congress does not have information on how the department will achieve 

required savings, and whether the savings will be achieved in a manner 

that is consistent with workforce-management laws.
Page 10 GAO-16-172 DOD Civilian and Contractor Workforces

According to its section 955 reports, DOD has made civilian personnel 

reductions; however, our analysis shows that the reductions may not 

achieve the savings required by section 955. Section 955 requires DOD 

to achieve savings in the cost of the civilian and contractor workforces 

between fiscal year 2012 and fiscal year 2017 not less than the savings in 

military basic pay, in percentage terms, resulting from reductions in 

military end strength over the same period, and also requires DOD to 

report on the savings achieved in each of its annual status reports. In its 

reports, however, DOD provides information on reductions to civilian fulltime equivalents (FTE), but does not report the civilian personnel costs 

associated with the reductions, and as a result it is not clear whether its 

reductions will achieve the savings required under section 955.

According to its September 2014 report, DOD does not project either 

military pay or civilian personnel costs beyond the budget year. As a 

result, DOD did not provide the information required by section 955. 

According to OUSD Comptroller officials, DOD does develop 5-year plans 

for civilian FTEs as a part of the process for both the annual budget and 

Future Years Defense Program (FYDP).9In addition, according to these 

 

9To provide information about its plans beyond the coming year, the DOD generally develops a 5-

year plan, called the Future Years Defense Program (FYDP), which is associated with the budget it

submits to Congress. 

Achieving Required 

Cost Savings in 

Civilian Workforce Is 

Uncertain Due to 

Incomplete Reporting 

by DOD, and Planned 

Increases in Contract 

Workforce Spending 

Pose a Challenge to 

Achieving Required 

Savings

DOD Has Made Civilian 

Personnel Reductions, but 

the Reductions May Not 

Achieve Required Savings
officials, FTEs are typically the primary measure they use in managing 

and reporting on DOD’s civilian workforce. For example, Office of 

Management and Budget Circular A-11, which provides guidance on the 

preparation of the President’s budget, uses FTEs as the main measure 

for the size of an agency’s civilian workforce in certain contexts. As a 

result, OUSD Comptroller chose to use civilian FTEs and military average 

strength—which is the closest approximation to FTEs for military 

personnel—for the purpose of assessing compliance with section 955’s 

savings requirement, rather than reporting savings in the cost of the 

civilian workforce compared to savings in military basic pay resulting from 

reductions in military end strength over the same period, as section 955 

requires.

According to DOD’s reports, it set a goal for achieving compliance with 

section 955 of reducing civilian FTEs less exclusions from fiscal year 

2012 through fiscal year 2017 by the same amount, in percentage terms, 

as military average strength over the same period. As of DOD’s February 

2015 report, this goal amounts to approximately a 7.0 percent reduction in 

the civilian workforce from fiscal years 2012 through 2017. As discussed 

above, under section 955, DOD is permitted to exclude spending on 

certain portions of the civilian and contractor workforces from the required 

reductions. In its February 2015 report, DOD reported that of its 

approximately 776,000 civilian FTEs in fiscal year 2012, approximately 

538,000 civilian FTEs, or about 69 percent, are covered by an exclusion. 

The approximately 7.0 percent reduction needed to match the reduction 

in military average strength applies to the remaining 238,000 civilian 

FTEs. In its February 2015 report, DOD reported that it had reduced 

civilian FTEs by 15,448 through fiscal year 2014, and has planned for an 

additional reduction of about 789 FTEs through fiscal year 2017. 

Together, these actual and planned FTE reductions represent a reduction 

of 6.8 percent from fiscal year 2012 to fiscal year 2017, compared to the 

7.0 percent reduction in military average strength over the same period 

DOD set as its goal for achieving compliance with section 955.

Civilian FTEs and military average strength by themselves, however, may 

not be reliable measures of the cost of the civilian personnel workforce 

and military personnel basic pay, which section 955 requires DOD to use 

in measuring the savings it is to achieve. As shown in table 3, from fiscal 

year 2012 through fiscal year 2016, DOD’s total civilian personnel costs

increased by 2.9 percent in current year (non-inflation-adjusted) terms 

even as total civilian FTEs decreased. In constant (inflation-adjusted) 

terms, total civilian personnel costs decreased, though not as much as 

civilian FTEs. As a result, reductions to civilian FTEs may not achieve 

Page 11 GAO-16-172 DOD Civilian and Contractor Workforces
commensurate savings, and larger FTE reductions may be required in 

order for DOD to achieve the savings required by section 955. 

Additionally, reductions in spending on military basic pay may have been 

more or less than reductions in military average strength over this period, 

depending on whether inflation-adjusted figures are used. As a result, 

using reductions in spending on military basic pay resulting from 

reductions in military end strength as its benchmark for savings, as 

section 955 requires, could mean that, depending on the treatment of 

inflation, either a smaller or larger reduction could be required for DOD to 

achieve the savings required by section 955 than if DOD were to continue 

to use reductions in military average strength as its benchmark. The 

effect of this difference over the period from fiscal years 2012 through 

2016 is shown in table 3.

Table 3: Changes in DOD Personnel and Related Costs Changes, Fiscal Years (FY) 2012–2016

Page 12 GAO-16-172 DOD Civilian and Contractor Workforces

FY2012–

FY2013

FY2013–

FY2014

FY2014–

FY2015

FY2015–

FY2016

Overall change, 

FY2012–FY2016 

Percent change in civilian full-time equivalents 

(FTE)

-3.4 -2.1 2.8 -0.4 -3.3

Percent change in civilian personnel costs 

measured in current year dollars

-1.6 0.0 3.3 1.2 2.9

Percent change in civilian personnel costs 

measured in FY2012 constant dollars

-1.9 -0.9 2.2 -0.1 -0.9

Percent change in military average strength -1.2 -1.7 -2.0 -1.1 -6.0

Percent change in military basic pay measured in 

current year dollars

-0.6 -1.4 -2.3 1.1 -3.3

Percent change in military basic pay measured in 

FY2012 constant dollars

-2.3 -2.6 -3.3 -0.1 -8.1

Source: GAO analysis of DOD data. | GAO-16-172

Note: Data are from GAO analysis of the February 2015 section 955 report and budget materials.

OUSD Comptroller and military service officials told us that they do not 

normally project civilian or military personnel costs beyond the budget 

year, and therefore this information is not typically available. However, 

they also noted that it may be possible to estimate costs for the purpose 

of section 955 compliance. For example, some military service officials 

said they were able to estimate the cost associated with positions 

excluded under section 955, which, if subtracted from the total funding for 

the civilian workforce, could be used to help estimate the amount of 

savings under section 955. In addition, an OUSD Comptroller official 

indicated military basic pay spending could be estimated based on budget 

year basic pay rates and projected strength levels.
Standards for Internal Control for the Federal Government note that 

agencies need operational and financial data to determine whether an 

agency is achieving its compliance requirements under various laws and 

regulations, monitor performance, and allocate resources.

Page 13 GAO-16-172 DOD Civilian and Contractor Workforces

10 Because 

DOD’s focus has been on making and reporting FTE reductions, not cost savings 

as required by 955, DOD and Congress do not have information on the extent to 

which the reductions will achieve savings, and DOD may risk falling short of the 

statutory requirement for cost savings in the civilian workforce.

Its September 2014 report indicated that DOD was on track to complete a 

majority of the reduction in spending on the contractor workforce required 

to meet its stated goal by fiscal year 2017. However, in its fiscal year 

2016 budget, DOD shows a planned increase in such spending for fiscal 

year 2016, which would leave about half of the reduction required through 

fiscal year 2017 still to be achieved. DOD has not provided an 

explanation of the reasons for the shortfall as required by section 955.

Based on our analysis of DOD’s section 955 reports and related 

documents, DOD would need to reduce its spending on the contractor 

workforce by about $4.1 billion between fiscal year 2012 and fiscal year 

2017 in order to match the approximately 7.0 percent level of reduction in 

military average strength over the same period.11 As of its September 2014 

report, DOD’s planned reductions through fiscal year 2015 showed that, if they 

were maintained though fiscal year 2017, DOD would have been on track to 

 

10GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).

11In addition to achieving required savings in funding for the contractor workforce, section 955 

requires DOD to, in each of its status reports, provide information on the number of 

contractor personnel reduced. DOD included contractor FTE data in its status report. We 

have issued several reports on DOD’s efforts to compile and review its inventory of 

contracted services, which is one of the main sources of its contractor FTE data. In May 

2013, we found that DOD’s contractor FTE estimates had significant limitations and do not 

accurately reflect the number of contractors providing services to DOD. We recommended 

that DOD provide an explanation of the methodology used to project contractor FTE 

estimates and any limitations of that methodology or the underlying information to which 

the methodology is applied. See GAO-13-470. DOD partially concurred with our 

recommendation; as of July 2015, this recommendation has not been addressed.

DOD Had Made the 

Majority of Required 

Reductions to Contractor 

Workforce Spending, but a 

Planned Increase in Fiscal 

Year 2016 Poses a 

Challenge to Achieving 

Required Savings
achieve its stated goals for complying with section 955.

Page 14 GAO-16-172 DOD Civilian and Contractor Workforces

12 In its September 2014 

report, DOD reported a budgeted level of spending on its contractor workforce of 

about $53.1 billion for fiscal year 2015—a reduction of about $4.7 billion 

compared to its fiscal year 2012 spending of about $57.8 billion, which, if 

maintained through fiscal year 2017, would exceed its required reduction 

of $4.1 billion from fiscal year 2012 though fiscal year 2017.13

In its fiscal year 2016 budget, however, DOD has planned an increase in funding 

for the contractor workforce over fiscal year 2014 levels that could lead to a 

gap between DOD’s stated goal for reductions and the reductions it has 

planned. As shown in figure 2, DOD reported having reduced contractor 

service spending between fiscal years 2012 and 2014 by about $3.2 

billion, or about 80 percent of the required reduction through fiscal year 

2017. Between fiscal years 2014 and 2016, however, DOD budgeted for 

an increase in contractor workforce spending of about $1.2 billion.14 If 

 

12As discussed above, section 955 requires DOD to achieve savings in the cost of the civilian and 

contractor workforce not less, in percentage terms, than the savings in military basic pay 

resulting from reductions in military end strength. As with its reductions in civilian 

personnel discussed above, DOD assesses its compliance with section 955’s savings 

requirements by comparing its savings in the contractor workforce to reductions in military 

average strength, not savings in military basic pay resulting from reductions in military end 

strength as required by section 955. Using reductions in spending on military basic pay 

resulting from reductions in military end strength as its benchmark for savings, as section 

955 requires, could mean that, depending on the treatment of inflation, either a smaller or 

a larger reduction could be required for DOD to achieve the savings required by section 

955 than if DOD were to continue to use reductions in military average strength as its 

benchmark.

13For the purposes of reporting on compliance with section 955’s provisions related to savings in 

the contractor workforce, DOD used the same spending information as it uses for 

reporting on compliance with section 808 of National Defense Authorization Act for Fiscal 

Year 2012, Pub. L. No. 112-81 (2011), as amended, which we discuss below. In 

December 2014, we found that DOD inconsistently calculated spending limitations under 

section 808, therefore overstating its adherence to the limitations. In September 2015, we 

found that DOD had taken steps to improve its calculations beginning in fiscal year 2015.

For more information, see GAO, DOD Contract Services: Improved Planning and 

Implementation of Fiscal Controls Needed, GAO-15-115 (Washington, D.C.: Dec. 11, 

2014); and DOD Contract Services: Improvements Made to Planning and Implementation 

of Fiscal Controls, GAO-15-780 (Washington, D.C.: Sept. 30, 2015).

14As with civilian personnel spending discussed above, DOD states in both its reports that it does 

not project contract services funding beyond the budget year. As a result, we use the gap 

between DOD’s fiscal year 2016 budgeted level and the required reduction according to 

our analysis for the purpose of identifying any shortfall. While the department does not 

project contract service funding beyond the budget year in its annual budget work, our 

ongoing work on DOD’s contract requirements process has found that DOD components 

have some insight into their future spending on contracted services.
carried out, this will mean that about half the reduction to contractor 

workforce spending through fiscal year 2017 that DOD has identified as 

its goal remains to be made.

Figure 1: DOD Progress toward Its Goal for Contractor Workforce Reductions as of 

Page 15 GAO-16-172 DOD Civilian and Contractor Workforces

February 2015 Status Report

An OUSD Comptroller official told us that the increase in spending on the 

contractor workforce between fiscal years 2014 and 2016 was driven by a 

number of different needs, including additional requirements for facilities 

maintenance and contracted services to support readiness and training 

needs. In addition, the official stated that complying with spending 

limitations under section 808 of the NDAA for Fiscal Year 2012,15 rather 

than section 955, has been a main focus of their efforts to limit spending on the 

contractor workforce in recent years. This was in part because, while 

 

15Pub. L. No. 112-81, § 808 (2011), as amended by Pub. L. No. 113-66, § 802 (2013) and Pub. L. 

No. 113-291 § 813 (2014). Section 808 of the NDAA for Fiscal Year 2012, as amended, limits 

DOD’s total obligations for contract services in fiscal year 2012 through fiscal year 2015 to the 

amount requested for these services in the fiscal year 2010 President’s budget request, 

subject to certain offsets and exceptions. For example, section 808, as amended, allows 

DOD to adjust contract services spending above 2010 levels to account for (1) net 

increases associated with contract services that were transferred from overseas 

contingency operations to the base budget and (2) the cost of additional civilian personnel 

positions over fiscal year 2010 levels.
section 955 requires that a certain level of savings be achieved by fiscal 

year 2017, section 808 was a recurring requirement for fiscal years 2012 

through 2015, and has been a main focus for those years. The official 

also explained that the contracted services spending reported by DOD is 

volatile in part because some categories of contract services, such as 

maintenance of facilities and equipment, can be deferred based on the 

department’s needs and available resources, including statutory 

limitations on spending such as sections 808 and 955.

Section 955 requires DOD to report on the savings achieved in each of its 

annual status reports and that, in any case in which savings fall short of 

the annual targets, the report shall include an explanation of the reasons 

for the shortfall. As discussed above, while DOD’s status report 

acknowledges the shortfall, it does not provide an explanation of the 

reasons for the shortfall as required by section 955, nor does it provide an 

explanation of how it plans to address the shortfall by fiscal year 2017. 

During our discussions, OUSD Comptroller officials acknowledged that 

their reports did not fully address the requirements of section 955. These 

officials explained that they did not fully address all of the requirements 

because they had to balance meeting the 955 requirements with other 

competing priorities including completing the President’s budget requests 

for fiscal year 2015 and 2016. In addition, OUSD Comptroller officials 

stated that they had assumed that the reports addressed all statutory 

requirements because the officials had briefed the congressional defense 

committees several times as they were preparing the reports and were 

not aware of any concerns the committees expressed regarding the 

reports. Without this information, however, it is uncertain whether DOD 

will achieve the required section 955 savings in contractor spending or 

whether Congress will have the information needed to have insight into 

what additional actions are required to achieve this goal.

At a time when the entire federal government is facing fiscal challenges 

that are likely to continue, DOD must plan strategically for reductions to 

its civilian and contractor workforces to achieve savings. Fully meeting all 

of the requirements of section 955 would be a step in the right direction in 

this regard, and would provide Congress with assurance that the 

department is making progress. However, DOD’s 2014 and 2015 reports 

did not meet the statutory requirements, and DOD needs to act quickly to 

ensure that its remaining two reports address these requirements and 

provide the needed assurance. Without information on actual savings in 

the civilian workforce rather than reductions in FTEs, Congress and DOD 

will not be positioned to determine whether the reductions will support 

Page 16 GAO-16-172 DOD Civilian and Contractor Workforces

Conclusions
section 955’s overall savings requirements. Furthermore, decision makers 

in Congress will not be able to assess progress on meeting the savings 

requirements for the civilian and contractor workforces within the statutory 

time frame without information in the remaining status reports on any 

shortfalls and actions DOD is taking to address these shortfalls.

To help ensure that Congress has the necessary information to provide 

effective oversight over DOD’s workforces, we are recommending that the 

Secretary of Defense direct the Office of the Under Secretary of Defense 

(Comptroller) (OUSD Comptroller), in collaboration with the Under 

Secretary of Defense for Personnel and Readiness (USD P&R), to 

address ongoing requirements in section 955 and include this information 

in status reports that accompany the President’s budget request for fiscal 

years 2017 and 2018. The information to be included in future status 

reports includes

· a comprehensive description of a plan to achieve savings for the 

civilian workforce and contractor workforce for fiscal year 2012 

through fiscal year 2017;

· a description demonstrating that the plan is consistent with policies 

and procedures implementing workforce-management laws and steps 

the department is taking to ensure that no unjustified transfers 

between workforces take place as part of the implementing plan;

· status reports to be included in the President’s budget request for 

fiscal years 2017 and 2018 describing the implementation of the plan 

in the prior year;

· the cost of covered civilian personnel and military basic pay for fiscal 

years 2012 through 2017, and an assessment of these costs in regard

to their compliance with the statutory requirements set forth in section 

955; and

· an explanation for any shortfall in its reductions for the civilian and 

contractor workforces, and a description of actions DOD is taking to 

achieve the required savings.

We provided a draft of this report to DOD for review and comment. In its 

written comments DOD concurred with all five parts of our 

recommendation and provided clarifying comments for three of the parts. 

DOD’s comments are reprinted in their entirety in appendix II.

Page 17 GAO-16-172 DOD Civilian and Contractor Workforces

Recommendations for 

Executive Action

Agency Comments 
We are sending copies of this report to the appropriate congressional 

committees; the Secretary of Defense, the Under Secretary of Defense 

(Comptroller); and the Under Secretary of Defense (Personnel and 

Readiness). In addition the report is available at no charge on the GAO 

website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

me at (202) 512-3604 or farrellb@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made key contributions to this report 

are listed in appendix III.

Brenda S. Farrell

Director, Defense Capabilities and Management

Page 18 GAO-16-172 DOD Civilian and Contractor Workforces
List of Committees 

The Honorable John McCain

Chairman

The Honorable Jack Reed

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Thad Cochran

Chairman

The Honorable Richard Durbin

Ranking Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Mac Thornberry

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

The Honorable Rodney Frelinghuysen

Chairman

The Honorable Pete Visclosky

Ranking Member

Subcommittee on Defense

Committee on Appropriations

House of Representatives

Page 19 GAO-16-172 DOD Civilian and Contractor Workforces
Appendix I: Scope and Methodology

To determine the extent to which the Department of Defense’s (DOD) 

September 2014 and February 2015 reports met the requirements 

specified in section 955 of the National Defense Authorization Act (NDAA) 

for fiscal year 2013, we reviewed DOD instructions and other related 

documentation to identify DOD’s efforts to address the statutory 

requirements of section 955. Specifically, we reviewed DOD instructions 

governing the roles and responsibilities of the Office of the Under 

Secretary of Defense (Comptroller) (OUSD Comptroller), Office of the 

Under Secretary of Defense for Personnel and Readiness (USD P&R), 

and the military services. We interviewed knowledgeable officials from the 

OUSD Comptroller, USD P&R, and Department of the Army, Navy, and 

Air Force offices with responsibility for section 955. We discussed roles, 

responsibilities, information, and assumptions involved in preparing the 

plan and DOD reports. Additionally, we had discussions with OUSD 

Comptroller, USD P&R, and service officials to determine what guidance 

was provided to DOD to implement the plan, as described in its 

September 2014 report, consistent with workforce-management laws. 

Also, we provided written questions to each of the services to obtain their 

perspectives on the roles, responsibilities, information, and assumptions 

involved in preparing their proposed reductions.

Further, we requested documentation on the assumptions and data used 

to compile the September 2014 report and budget justification materials 

accompanying the President’s budget request for fiscal year 2016. We 

requested documentation on DOD guidance to address section 955 

requirements, but DOD officials said there were not aware of any 

documentation. We therefore relied on interviews with DOD and service 

offices to obtain this information. To determine the extent to which DOD 

met the requirements specified in section 955 of the NDAA for fiscal year 

2013, we analyzed DOD’s September 2014 report and February 2015 

report and compared them to the statutory requirements in section 955. 

We conducted this assessment with two analysts independently reviewing 

DOD’s September 2014 report using a scorecard methodology and 

assigned a score to determine whether the document (1) addresses, (2) 

partially addresses, or (3) does not address the statutory requirements. 

The analysts then met to resolve any differences in their respective 

independent analyses.

To determine the extent to which DOD has achieved the cost savings 

required under section 955 and identified the savings in its September 

2014 report and February 2015 report, we reviewed and analyzed the 

civilian and contractor workforce reductions identified in these reports and 

associated budget documents. To assess DOD’s progress towards its 

Page 20 GAO-16-172 DOD Civilian and Contractor Workforces

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

goal for civilian full-time equivalent (FTE) reductions, we calculated, 

based on DOD’s February 2015 report, (1) the FTE reduction that 

occurred from fiscal year 2012 through fiscal year 2014, the most recent 

year for which actual values are available, and (2) the additional reduction 

that DOD has planned through fiscal year 2017. We then compared the 

percentage reduction in civilian FTEs from fiscal year 2012 to fiscal year 

2017 to the percentage reduction in military average strength over the 

same period.

To assess the extent to which reductions in civilian FTEs may result in the 

required savings to the civilian workforce, as well as the extent to which 

reductions in military average strength result in a similar reduction to 

military basic pay, we reviewed DOD budget data on each data series for 

fiscal years 2012 through 2016 and calculated (1) the annual percentage 

change from year to year, and (2) the overall percentage change during 

this period. We then compared the relationships between (1) civilian FTEs 

and personnel costs—both drawn from DOD’s annual Operations and 

Maintenance overview submitted to Congress as part of its budget 

justification, and (2) military average strength as reported in the section 

955 report and military basic pay as reported in DOD and service budget 

documents. In comparing these relationships, we used both current year 

(non-inflation-adjusted) and fiscal year 2012 constant (inflation-adjusted) 

dollars for civilian personnel costs and military basic pay. To produce the 

inflation-adjusted figures, we used the following deflators, as published by 

DOD in its National Defense Budget Estimates for Fiscal Year 2016: for 

civilian compensation, the “Civilian Pay” deflator; for civilian benefits, the 

“Total Excluding Pay, Fuel, and Medical” deflator; for military basic pay, 

the “Military Pay” deflator.

To assess DOD’s progress towards its goal for the contractor workforce, 

we calculated the planned percentage reduction to military average 

strength from fiscal year 2012 through fiscal year 2017 that DOD included 

in its status report accompanying the fiscal year 2016 budget. Using that 

percentage reduction, we calculated the reduction that would be required 

to achieve an equivalent percentage reduction in contractor workforce 

spending. We then calculated, based on the data provided by DOD in its 

report and related documentation, (1) the reduction that has occurred 

from fiscal year 2012 through fiscal year 2014, the most recent year for 

which actual values are available; (3) the additional increase that DOD 

has planned through fiscal year 2016, the latest year for which DOD 

Page 21 GAO-16-172 DOD Civilian and Contractor Workforces
Appendix I: Scope and Methodology

provides contractor workforce spending data; and (4) any shortfall 

between the required reductions and DOD’s actual and planned 

reductions through fiscal year 2017.

Page 22 GAO-16-172 DOD Civilian and Contractor Workforces

1 To the extent that our analysis identified 

a shortfall, we interviewed OUSD Comptroller officials to understand the reasons 

for the shortfall. We also interviewed OUSD Comptroller officials about how 

and why they chose the goals and data that were included in their reports, 

as well as alternative approaches to collecting the data required by 

section 955.

According to OUSD Comptroller officials, the data on military, civilian, and 

contractor workforces included in their 955 reports and budget materials 

are based on data from the Comptroller Information System and Program 

Resources Collection Process. We determined that these data were 

sufficiently reliable for the purpose of reporting on and analyzing 

reductions to the civilian workforces. Specifically, we reviewed previous 

GAO reports that used workforce data, reviewed DOD instructions on the 

preparation and entering of this data, compared military and civilian 

personnel and funding to other data published by DOD, and discussed 

the reliability of the data with OUSD Comptroller officials.

We conducted this performance audit from February 2015 to December 

2015 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

 

1As noted in our report, DOD states in both its September 2014 report and its status report 

accompanying the fiscal year 2016 budget that it does not project contract services 

funding beyond the budget year. As a result, we use the gap between DOD’s fiscal year 

2016 budgeted level and the required reduction according to our analysis for the purpose 

of identifying any shortfall.
Appendix II: Comments from the Department 

of Defense

Page 23 GAO-16-172 DOD Civilian and Contractor Workforces

Appendix II: Comments from the Department 

of Defense
Appendix II: Comments from the Department 

of Defense

Page 24 GAO-16-172 DOD Civilian and Contractor Workforces
Appendix II: Comments from the Department 

of Defense

Page 25 GAO-16-172 DOD Civilian and Contractor Workforces
Appendix III: GAO Contact and Staff 

Acknowledgments

Brenda S. Farrell, (202) 512-3604 or farrellb@gao.gov

In addition to the contact named above, Vincent Balloon, Assistant 

Director; Timothy Carr; Timothy DiNapoli; Beth Reed Fritts; Amie Lesser; 

Daniel Ramsey; Terry Richardson; Ophelia Robinson; John Van Schaik; 

Allen Westheimer; Erik Wilkins-McKee; and Michael Willems made key 

contributions to this report.

Page 26 GAO-16-172 DOD Civilian and Contractor Workforces

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments
Appendix IV: Accessible Data

Page 27 GAO-16-172 DOD Civilian and Contractor Workforces

OFFICE OF THE UNDER SECRETARY OF DEFENSE

1100 DEFENSE PENTAGON

WASHINGTON, DC 20301 1100

COMPTROLLER

DEC 15 2015

Ms. Brenda S. Farrell

Director, Defense Capabilities and Management Team

U.S. Government Accountability Office

44 1 G Street, NW

Washington DC 20548

Dear Ms. Farrell:

This is the Department of Defense (DoD) response to the GAO Draft 

Report GA0- 16-172, "CIVILIAN AND CONTRACTOR WORKFORCES: 

Complete Information Needed to Assess DOD's Progress in Meeting 

Statutory Requirements for Reductions and Achieving Savings" dated 

November 17, 20 15 (GAO Code 352016). The Department appreciates 

the GAO's work on this engagement, as well as the opportunity to review 

and comment on this draft report.

The Department concurs with recommendations three and five. The 

Department concurs with comment on recommendations one, two, and 

four. Attached is DoD's proposed response to the subject rep01t. My point 

Appendix IV: Accessible Data

(352016)

Agency Comment 

Letter

Text of Appendix II: 

Comments from the 

Department of Defense

Page 1
Appendix IV: Accessible Data

of contact is Ms. Anna McNally who can be reached at 703-697-3253 or 

via email at anna.a.mcnally.civ@mail.mil.

Sincerely,

Monique Dilworth

Director, Operations Directorate

Enclosure:

As Stated

GAO DRAFT REPORT DATED NOVEMBER 17, 2015 GA0-16-172 (GAO 

CODE 352016)

"CIVILIAN AND CONTRACTOR WORK FORCES: COMPLETE 

INFORMATION NEEDED TO ASSESS DOD' S PROGRESS IN 

MEETING STATUTORY REQUIREMENTS FOR REDUCT IONS AND 

ACHIEVING SAVINGS"

DEPARTMENT OF DEFENSE COMMENTS

TO THE GAO RECOMMENDATION

Department of Defense Response to GAO Recommendation s for the 

inclusion of information in future status reports that accompany the FY 

2017 and FY 2018 President's Budget request The GAO recommend s 

that the Department of Defense (DoD) address ongoing requirements in 

section 955 and include additional information in status reports that 

accompany the President's Budget request for Fiscal Years 2017 and 20 

18. The following DoD responses are provided to the respective GAO 

recommendations:

Recommendation one: A comprehensive description of a plan to achieve 

savings for the civilian workforce and contractor workforce for fiscal year 

2012 through fiscal year 201 7

Response: Concur with comment. The DoD submitted its initial section 

955 report in September 2014 for information reflected in the FY 2015 

President's Budget. The report reflected the Department's year by year 

plan to achieve the savings for the civilian and contractor workforce 

reduction by FY 2017 which resulted from the Department's program and 

Page 28 GAO-16-172 DOD Civilian and Contractor Workforces

Page 2
Appendix IV: Accessible Data

budget process, as well as a comprehensive workforce to workload 

review that had been completed. The Department concurs with including 

a more robust description of the initiatives that comprised the plan to 

achieve savings for the civilian and contractor workforce.

Recommendation two: A description demonstrating that the plan is 

consistent with policies and procedures implementing workforce 

management laws and steps the department is taking to ensure that no 

unjustified transfers between workforces take place as part of the 

implementing plan

Response: Concur with comment. The Department's plans to date are 

consistent with and reflect workforce shaping and workload sourcing 

requirement s, as wet l as other criteria pertaining to manpower 

requirement such as risk mitigation. The Office of the Secretary of 

Personnel and Readiness remains actively engaged in decisions affecting 

the workforce. The

Department's Planning, Programming, Budgeting and Execution System 

(PPBES) process helps to ensure that there are no unjustified transfers 

between workforces and that any changes are made in accordance with 

workforce management laws. The Department will include a statement 

similar to the above in the next section 955 report.

Recommendation three: Status reports to be included in the President's 

Budget request for Fiscal Years 2017 and 2018 describing the 

implementation of the plan in the prior year

Response: Concur.

Recommendation four: The cost of covered civilian personnel and military 

basic pay for fiscal years 2012 through 2017, and an assessment of these 

costs in regard to their compliance with the statutory requirements set 

forth in section 955

Response: Concur with comment. The Department will address cost 

savings in terms of fully burden civilian personnel cost along with total 

military personnel compensation that includes allowances.

Recommendation five: An explanation for any shortfall in its reductions for 

the civilian and contractor work forces, and a description of actions DOD 

is taking to achieve the required savings

Page 29 GAO-16-172 DOD Civilian and Contractor Workforces

Page 3
Appendix IV: Accessible Data

Response: Concur.

Data Table for Figure 1: DOD Progress toward Its Goal for Contractor Workforce 

Page 30 GAO-16-172 DOD Civilian and Contractor Workforces

Reductions as of February 2015 Status Report

Reduction through 2014 $3,226

Increase planned through 2016 $1,187

Additional reduction required $2,015

Data Tables
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