DEFENSE 

CONTRACTORS

Additional Actions 

Needed to Facilitate 

the Use of DOD's 

Inventory of 

Contracted Services

Report to Congressional Committees

November 2014

GAO-15-88

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-15-88, a report to 

congressional committees

November 2014

DEFENSE CONTRACTORS

Additional Actions Needed to Facilitate the Use of 

DOD’s Inventory of Contracted Services

Why GAO Did This Study

DOD is the government’s largest 

purchaser of contractor-provided 

services. In 2008, Congress required 

DOD to compile and review an annual 

inventory of its contracted services to 

include the number of contractors 

providing services to DOD and the 

functions these contractors performed, 

and in 2011, amended this statute to 

require DOD to plan to use that 

inventory to inform certain departmentwide decision making processes. The 

National Defense Authorization Act for 

Fiscal Year 2014 mandated GAO to 

report on the required reviews and 

plans to use these inventories.

For this report, GAO assessed the 

extent to which DOD components (1) 

reviewed contracts and activities in the 

fiscal year 2012 inventory of contracted 

services and (2) developed plans to 

use the inventory for decision-making. 

GAO reviewed relevant laws and 

guidance, reviewed component 

certification letters from 32

components, and interviewed DOD 

acquisition, manpower, programming,

and budgeting officials.

What GAO Recommends

GAO recommends DOD revise 

inventory guidance to improve the 

review of contract functions, approve a 

plan of action with milestones and 

timeframes to establish a common 

data system to collect contractor 

manpower data, and designate a 

senior management official at the 

military departments to develop plans 

to use inventory data to inform 

management decisions. DOD 

concurred with GAO’s 

recommendations.

What GAO Found

The Department of Defense (DOD) continues to face challenges in assuring that 

it conducts and reports on the results of its required inventory reviews. As of 

September 2014, 32 of the 33 components that were required to conduct an 

inventory review certified that they had done so and generally addressed more of 

the required reporting elements than in fiscal year 2011. However, GAO found 

limitations with the inventory review results. For example, the Air Force did not 

submit a fiscal year 2012 inventory certification letter and the Army’s review was 

incomplete at the time its Secretary signed the certification. Further, components 

may not have fully identified all instances in which contractors were providing 

services that are closely associated with inherently governmental functions, a key 

review objective to help ensure that the DOD is not overly reliant on contractors 

to support core missions. DOD’s March 2014 guidance, which is applicable to the

fiscal year 2013 inventory, does not fully address some of the shortcomings GAO 

identified, including how to identify contracts for review or approaches to ensure 

that components adequately assess contractor activities. As a result, 

components may not fully identify instances of contractors providing services that 

are closely associated with inherently governmental functions. 

A key factor hindering the components’ inventory reviews is the lack of accurate 

and reliable data. DOD has not resolved issues with implementing its planned

common data system based on the Army’s existing system. Further, in 

September 2014, DOD initiated a new review, due by December 2014, to identify 

and develop options to collect these data. This review raises a question of 

whether DOD will continue to implement a common data system modeled after 

the Army’s system or attempt to develop a new system. DOD continues to lack a 

plan with timeframes and milestones to measure its progress toward 

implementing a common data system. These factors jeopardize DOD’s goal to 

have all components, by 2016, collect statutory-required contractor manpower 

data. Further delays in resolving these issues will undermine the inventory’s 

usefulness.

The military departments generally have not developed plans to use the 

inventory of contracted services to facilitate DOD’s strategic workforce planning, 

workforce mix, and budget decision-making processes, as statutorily required. 

Numerous offices are responsible for the various decision-making processes at 

the military departments, and the Secretaries of the military departments have 

not assigned specific responsibility for coordinating among these offices to do so. 

The absence of officials who are accountable for integrating the use of the 

inventory leaves the department at continued risk of not complying with the 

applicable legislative requirements to use the inventory to support management 

decisions. Internal control standards state that management should assign 

responsibility to enable an organization to achieve management objectives and 

to comply with laws.

View GAO-15-88. For more information, 

contact Timothy J.DiNapoli at (202) 512-4841 

or dinapolit@gao.gov.
Page i GAO-15-88 Defense Contractors

Letter 1

Background 4

Components Better Addressed Reporting Requirements in Fiscal 

Year 2012, but Some Reviews Were Incomplete 11

The Military Departments Have Not Developed Statutorily 

Required Plans or Identified Specific Responsibilities to 

Facilitate the Use of the Inventory 22

Conclusions 29

Recommendations for Executive Action 30

Agency Comments and Our Evaluation 31

Appendix I Objectives, Scope, and Methodology 34

Appendix II Comparison of Components’ Identification of Contractors Providing 

Services Closely Associated With Inherently Governmental Functions 

in their Fiscal Year 2011 and 2012 Certification Letters 38

Appendix III Comments from the Department of Defense 40

Appendix IV GAO Contact and Staff Acknowledgments 42

Tables

Table 1: Estimated Number of Contractor Full Time Equivalents 

(FTEs) and Obligations as Reported in DOD’s Inventory of 

Contracted Services, Fiscal Years 2008-2013 6

Table 2: DOD’s Guidance for Completing the Review of the Fiscal 

Year 2012 Inventory of Contracted Services 13

Table 3: Components’ reporting of required data elements in 

certification letters for fiscal years 2011 and 2012 14

Table 4: Strategic Workforce Planning Guidance and Processes at 

the Three Military Departments 23

Table 5: Role of the Inventory of Contracted Services in Existing 

Workforce Mix and Insourcing Guidance and Processes at 

the Three Military Departments 25

Contents
Page ii GAO-15-88 Defense Contractors

Table 6: Role of the Inventory of Contracted Services in Existing 

Budgeting Guidance and Processes at the Three Military 

Departments 27

Table 7: Offices Responsible for Workforce Planning, Budgeting, 

and the Inventory of Contracted Services at the Military 

Departments 28

Figures

Figure 1: Requirements under Title 10 Section 2330a Subsection 

(f) 9

Figure 2: Comparison of Total Obligations for Contracts Which 

Often Involve Closely Associated with Inherently 

Governmental Functions to Obligations Reported for 

These Functions In Fiscal Year 2012 Inventory 

Certification Letters 19
Page iii GAO-15-88 Defense Contractors

Abbreviations

AT&L Office of the Under Secretary of Defense for Acquisition, 

Technology, and Logistics

CMRA Contractor Manpower Reporting Application

DLA Defense Logistics Agency 

DOD Department of Defense

DTRA Defense Threat Reduction Agency 

ECMRA Enterprise-wide Contractor Manpower Reporting 

Application 

FAR Federal Acquisition Regulation

FPDS-NG Federal Procurement Data System – Next Generation

FTE Full-time equivalent

ODA&M Office of the Director of Administration and Management 

P&R Office of the Under Secretary of Defense for Personnel 

and Readiness

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-15-88 Defense Contractors

441 G St. N.W.

Washington, DC 20548

November 19, 2014

Congressional Committees

The Department of Defense (DOD), the federal government’s largest 

purchaser of contractor-provided services, reported that it obligated about 

$187 billion—more than half of its total contract obligations—on 

contracted services in fiscal year 2012. DOD relies on contractors to 

perform functions as varied as professional and management support, 

information technology support, medical services, and weapon system 

and intelligence support. These contractor personnel constitute a key 

component of DOD’s total workforce, which includes DOD active and 

reserve forces and DOD civilian employees, and they are vital to helping 

DOD meet its mission. While there are benefits to using contractors to 

perform services for the government, the government can risk becoming 

overly reliant on contractors to support core missions, including providing 

services that are closely associated with inherently governmental 

functions,1 or creating circumstances in which contractors inappropriately 

perform functions deemed inherently governmental.2

In recent years, Congress has enacted legislation to improve DOD’s 

ability to manage its acquisition of contracted services; to make more 

strategic decisions about the appropriate workforce mix; and to better 

align resource needs through the budget process to achieve that mix. As 

part of these efforts, Section 2330a of title 10 of the U.S. Code requires 

DOD to annually compile, and the military departments and defense 

agencies to review, an inventory of services contracted for or on behalf of 

DOD during the preceding fiscal year. This inventory is intended, in part, 

 1

Closely associated with inherently governmental functions are those functions that while 

not inherently governmental, may approach being in that category because of the nature 

of the function, the manner in which the contractor performs the contract, or the manner in 

which the government administers performance under the contract. Section 7.503(d) of 

the Federal Acquisition Regulation (FAR) provides examples of such functions. 

2

Inherently governmental function means, as a matter of policy, a function that is so 

intimately related to the public interest as to mandate performance by government 

employees and includes functions that require the exercise of discretion in applying 

government authority, or making value judgments in making decisions for the government. 

Section 7.503(c) of the FAR provides examples of such functions. Contracts shall not be 

used for the performance of inherently governmental functions. FAR § 7.503(a). See also, 

FAR § 2.101. 
Page 2 GAO-15-88 Defense Contractors

to help provide better insight into the number of contractor full-time 

equivalents (FTEs) providing services to the department and the functions 

they are performing, and determine whether any of these functions 

warrant conversion to DOD civilian performance.3 Further, this section 

also requires DOD to undertake certain actions using these inventories. 

Specifically, subsections (e) and (f), respectively, direct the secretaries of 

the military departments or heads of the defense agencies to, among 

other things:

• review the inventory to ensure that personal services contracts on the 

list are performed under applicable statute and regulation and identify 

contracted functions that DOD should consider for conversion; and

• develop a plan, including an enforcement mechanism and approval 

process, to use the inventory for strategic workforce planning, 

workforce mix, and budgeting decisions.

Section 951(a) of the National Defense Authorization Act for Fiscal Year 

2014 mandated GAO to report on DOD’s implementation of title 10 

section 2330a subsections (e) and (f).4 We assessed DOD’s efforts to (1) 

implement subsection (e) to review contracts and functions in the 

inventory of contracted services for the fiscal year 2012 inventory and (2) 

implement subsection (f) to develop plans and processes to use the 

inventory for strategic workforce planning, workforce mix, and budget 

decisions.

To assess the extent to which DOD components—which include the three 

military departments and the defense agencies—complied with the 

requirements to review applicable contracts and functions in its inventory 

of contracted services pursuant to subsection (e), we focused on DOD’s 

fiscal year 2012 inventory and associated review, which was the latest 

inventory and review available when we initiated our work. We reviewed 

DOD’s fiscal year 2012 inventory review guidance, issued on February 4, 

2013, which required the military departments and defense agencies to 

certify—through submission of a certification letter to the Office of the 

 3

An FTE is a standard measure of labor that equates to one year of full-time work (labor 

hours as defined by the Office of Management and Budget Circular A-11 each year). To 

report the number of contractor FTEs, one would divide the number of direct labor hours 

reported by a contractor for each contracted service by the number of labor hours in a 

federal employee work year, which was 2,080 in fiscal year 2012.

4

Pub. L. No. 113-66 (2013).
Page 3 GAO-15-88 Defense Contractors

Under Secretary of Defense for Personnel and Readiness (P&R)—that 

their review was conducted in accordance with subsection (e). The 

guidance required components to report on seven elements, including, 

among other elements, the contract selection criteria and methodologies 

used to conduct the reviews, the extent to which contractors were found 

to be performing inherently governmental functions and those closely 

associated with inherently governmental functions, and to the extent 

necessary, a plan to realign the work to government performance. We 

assessed all unclassified fiscal year 2012 inventory review certification 

letters submitted by 32 DOD components as of September 2014 to 

determine if components addressed the seven elements specified in 

DOD’s February 2013 inventory review guidance.5 In addition, we 

selected the Army, Navy, and Air Force, based on obligations for 

contracted services, and three defense agencies based on the number of 

contractor FTEs they identified as performing closely associated with 

inherently governmental functions—the Defense Logistics Agency (DLA), 

the Defense Threat Reduction Agency (DTRA) and the Office of the 

Director of Administration and Management (ODA&M)—for more in depth 

reviews.6 We interviewed officials responsible for compiling and reviewing 

the inventory and reviewed training documents and selected data from 

the inventory review process. In addition, we interviewed officials from 

P&R; the Office of the Under Secretary of Defense for Acquisition, 

Technology, and Logistics (AT&L); and the Office of the Under Secretary 

of Defense (Comptroller).

To assess the extent to which DOD components have developed plans 

and processes to use the inventory to inform management decisions 

pursuant to subsection (f), we reviewed defense-wide and military 

department specific strategic workforce planning, manpower mix, and 

budgeting guidance and documentation. This guidance and 

documentation included DOD’s Fiscal Year 2013-2018 Strategic 

 5

In September 2014, the DOD Inspector General found that not all DOD components, as 

defined by DOD Directive 5100.01, participated in the fiscal year 2012 inventory of 

contracted services process. The DOD Inspector General recommended that DOD identify 

the components required to submit an inventory of contracted services. Department of 

Defense Inspector General, “Independent Auditor’s Report on Agreed-Upon Procedures 

for DOD Compliance With Service Contract Inventory Compilation and Certification 

Requirements for FY 2012”, DODIG-2014-114, (Alexandria, VA: Sept. 17, 2014). 

6

ODA&M is being realigned and will merge with the Office of the Deputy Chief 

Management Officer.
Page 4 GAO-15-88 Defense Contractors

Workforce Plan Report, DOD’s instructions on manpower mix and 

insourcing criteria, DOD’s Financial Management Regulations and 

supplemental guidance, and available guidance and instructions issued 

by the military departments. We also reviewed meeting minutes at the 

Navy, where an official stated the Navy had formed a working group to 

address the requirements of title 10 U.S.C. § 2330a(f). We interviewed 

officials from P&R, AT&L, and the Comptroller’s office, and acquisition, 

manpower, and budgeting officials at all three military departments. At the 

Army and Air Force we also interviewed programming officials. A detailed 

description of our scope and methodology is included in appendix I.

We conducted this performance audit from May 2014 to November 2014 

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 audit objectives. We believe that the 

evidence obtained provides a reasonable basis for our findings and 

conclusions based on audit objectives.

In part to improve the information available and management of DOD’s 

acquisition of services, in fiscal year 2002 Congress enacted section 

2330a of title 10 of the U.S. Code, which required the Secretary of 

Defense to establish a data collection system to provide management 

information on each purchase of services by a military department or 

defense agency.7 The information DOD is to collect includes, among 

other things, the services purchased, the total dollar amount of the 

purchase, the form of contracting action used to make the purchase, and 

the extent of competition provided in making the purchase. In 2008, 

Congress amended section 2330a to add a requirement for the Secretary 

of Defense to submit an annual inventory of the activities performed 

pursuant to contracts for services on behalf of DOD during the preceding 

fiscal year.8

 7

National Defense Authorization Act for Fiscal Year 2002, Pub. L. No. 107-107, § 801(c) 

(2001).

8

National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181, § 807(a).

Background

Inventory Compilation 

Requirements
Page 5 GAO-15-88 Defense Contractors

The inventory is to include a number of specific data elements for each 

identified activity, including:

• the function and missions performed by the contractor;

• the contracting organization, the component of DOD administering the 

contract, and the organization whose requirements are being met 

through contractor performance of the function;

• the funding source for the contract by appropriation and operating 

agency;

• the fiscal year the activity first appeared on an inventory;

• the number of contractor employees (expressed as full FTEs) for 

direct labor, using direct labor hours and associated cost data 

collected from contractors;9

• a determination of whether the contract pursuant to which the activity 

is performed is a personal services contract;10 and

• a summary of the information required by section 2330a(a) of title 10 

of the U.S. Code.11

Within DOD, AT&L, P&R, and the Comptroller have shared responsibility 

for issuing guidance for compiling and reviewing the inventory. P&R 

compiles the inventories prepared by the components, and AT&L formally 

submits a consolidated DOD inventory to Congress no later than June 30 

of each fiscal year, though some inventory submissions have been later. 

DOD has submitted annual, department-wide inventories for fiscal years 

2008 through 2013, the most recent submitted on July 2, 2014 (see table 

1).12

 9

Estimates of full-time equivalents may be used where such data are not available and 

cannot reasonably be made available in a timely manner for the purposes of the inventory. 

10 U.S.C. § 2330a(c)(2)(E).

10A personal services contract means a contract that, by its express terms or as 

administered, makes the contractor personnel appear to be, in effect, government 

employees. Agencies shall not award personal services contracts unless specifically 

authorized by statute to do so. FAR §§ 2.101, 37.104(b). 

1110 U.S.C. § 2330a(c)(2). 

12The Army also submitted an inventory of contracted services for fiscal year 2007.
Page 6 GAO-15-88 Defense Contractors

Table 1: Estimated Number of Contractor Full Time Equivalents (FTEs) and 

Obligations as Reported in DOD’s Inventory of Contracted Services, Fiscal Years 

2008-2013 

Fiscal year

Estimated number of 

contractor FTEs

Total obligations

(in billions)

2008 655,000 $127

2009 767,000 $155 

2010 623,000 $121 

2011 710,000 $145

2012 670,000 $129

2013 629,000 $123

Source: DOD’s inventory of contracted services | GAO-15-88.

Notes: The Army’s inventory data reflects total invoiced dollar amounts rather than obligations.

The changes in DOD’s overall approach, in particular how DOD as a whole reflected research and 

development services and the use of different formulas for estimating contractor FTEs, among other 

factors, affected the reported changes in inventory data from year to year. Consequently, we and 

DOD officials agreed that caution should be exercised when making direct comparisons between 

fiscal years 2008 through 2013 inventory data. All FTE figures are rounded to the nearest thousand.

As we previously reported, the service contract obligations reported in the inventory of contracted 

services for a given fiscal year may not match the amount of contract obligations from the Federal 

Procurement Data System-Next Generation (FPDS-NG), in part because the FPDS-NG obligation 

amount for services captures categories of services that are not reported in the inventory, such as 

lease or rental of equipment and facilities, and military construction. See GAO-13-491.

Since DOD implemented the department-wide inventory of contracted 

services, the primary source used by DOD components to compile their 

inventories, with the exception of the Army, has been Federal 

Procurement Data System-Next Generation (FPDS-NG). As we have 

previously reported, the FPDS-NG—the government’s central repository 

for contracting data—has several limitations that impact its utility for 

purposes of compiling a complete and accurate inventory.13 For example, 

FPDS-NG does not capture the number of contractor FTEs or direct labor 

hours used to perform each service, does not capture any services 

performed under contracts that are predominately for supplies, and does 

not identify more than one type of service purchased for each contract 

action. As the inventory is required to identify each activity performed 

pursuant to a contract for services, the use of FPDS-NG as the basis for 

the data in the DOD components’ inventories does not satisfy the 

 13GAO, Defense Acquisitions: Continued Management Attention Needed to Enhance Use 

and Review of DOD’s Inventory of Contracted Services, GAO-13-491 (Washington, D.C.: 

May 23, 2013).
Page 7 GAO-15-88 Defense Contractors

inventory statute, and limits the usefulness of inventory data in making 

management decisions.

As we previously reported, to obtain better visibility of its service 

contractor workforce, the Army developed its Contractor Manpower 

Reporting Application (CMRA) in 2005 to collect information on labor-hour 

expenditures by function, funding source, and mission supported on 

contracted efforts, and has used CMRA as the basis for its inventory.14

CMRA captures data directly reported by contractors on services 

performed at the contract line item level, including information on the 

direct labor dollars, direct labor hours, total invoiced dollars, the functions 

performed, and the organizational unit on whose behalf the services are 

being performed. In instances where contractors are providing different 

services under the same task order, or are providing services at multiple 

locations, contractors can enter additional records in CMRA to capture 

information associated with each type of service or location. It also allows 

for the identification of services provided under contracts for goods.

Within 90 days after an inventory is submitted to Congress, section 

2330a(e) of title 10 of the U.S. Code requires the secretaries of the 

military departments or heads of the defense agencies to complete a 

review of the contracts and functions in the inventory for which they are 

responsible. P&R, as supported by the Comptroller, is responsible for, 

among other things, developing guidance for the conduct and completion 

of this review.15 As part of this review, the military departments and 

defense agencies are to ensure that:

• any personal services contracts on the inventory were properly 

entered into and performed appropriately;

• the activities on the list do not include any inherently governmental 

functions; and

• to the maximum extent practicable, the activities on the inventory do 

not include any closely associated with inherently governmental 

functions.

 14GAO-13-491.

1510 U.S.C. § 2330a(c)(1)(A)(iii).

Inventory Review and Use 

Requirements
Page 8 GAO-15-88 Defense Contractors

Section 2330a(e) also requires under this review that the secretaries of 

the military departments and heads of defense agencies identify work that 

should be considered for conversion to government performance, or 

insourced, pursuant to section 2463 of title 10 of the U.S. Code, or to a 

more advantageous acquisition approach. Section 2463 specifically 

requires the Secretary of Defense to make use of the inventory to identify 

critical functions, acquisition workforce functions, and closely associated 

with inherently governmental functions performed by contractors, and that 

the Under Secretary of Defense for P&R implement guidelines and 

procedures to give special consideration to converting those functions to 

DOD civilian performance.

Further, section 808 of the National Defense Authorization Act for Fiscal 

Year 2012 requires the Secretary of Defense to issue guidance to the 

military departments and the defense agencies to, among other things, 

eliminate contractor positions identified as performing inherently 

governmental functions and reduce, by 10 percent, funding for contractor 

staff performing closely associated with inherently governmental functions 

in fiscal years 2012 and 2013.16 As implemented by DOD, the secretaries 

of the military departments and heads of the defense agencies are 

instructed to use the fiscal year 2010 inventory, or the fiscal year 2011 

inventory if the data are unknown in the 2010 inventory, as the baseline 

against which the 10 percent funding reductions will be made. GAO has 

ongoing work to assess DOD’s compliance with section 808.

In addition, in December 2011 section 2330a of title 10 of the U.S. Code 

was amended to add a new subsection (f) requiring the secretaries of the 

military departments and heads of the defense agencies responsible for 

contracted services in the inventory to develop a plan, including an 

enforcement mechanism and approval process, to use the inventory to 

inform management decisions (see figure 1).

 16Pub. L. No. 112-81, § 808(c) (2011).
Page 9 GAO-15-88 Defense Contractors

Figure 1: Requirements under Title 10 Section 2330a Subsection (f)

Collectively, these statutory requirements mandate the use of the 

inventory and the associated review process to enhance the ability of 

DOD to identify and track services provided by contractors, achieve 

accountability for the contractor sector of DOD’s total workforce, help 

identify contracted services for possible conversion from contractor 

performance to DOD civilian performance, support DOD’s determination 

of the appropriate workforce mix, and project and justify the number of 

contractor FTEs included in DOD’s annual budget justification materials.
Page 10 GAO-15-88 Defense Contractors

We have issued several reports on DOD’s efforts to compile and review 

its inventory of contracted services, including initiatives to standardize 

contractor manpower data collection across the department. For example, 

in January 2011 we recommended that DOD develop a plan of action to 

facilitate the department’s stated intent to collect contractor manpower 

data and address other limitations in its approach to meeting inventory 

requirements, such as using FPDS-NG to compile the required 

inventories.17

In April 2012, we reported that DOD issued a plan in November 2011 to 

develop a common technology solution, leveraging existing data 

collection approaches, such as the Army’s CMRA system, that would 

allow the department to collectively meet the inventory requirements.18

DOD’s November 2011 plan provided for short-term and long-term 

actions intended to meet the requirements of 10 U.S.C. § 2330a. DOD 

stated that it was committed to assisting components as they implement 

their plans, especially those currently without reporting processes or 

infrastructure in place, by leveraging the Army’s CMRA system, 

processes, best practices, and tools to the maximum extent possible. Part 

of the long-term plan was to develop a comprehensive instruction for 

components to use on the development, review, and use of the 

inventories and for the Office of the Deputy Chief Management Officer, 

P&R, and other stakeholders to form a working group to develop and 

implement a common data system to collect and house the information 

required for the inventory, including contractor manpower data. DOD 

noted in its plan that it expected the data system to be operational and 

DOD components to be reporting on most of their service contracts by 

fiscal year 2016. While we found the plan represented a step in the right 

direction, it did not contain timeframes or resources needed, as we had 

previously recommended. Further, we found that DOD faced challenges 

in developing a common data collection system given the different 

requirements of the military departments and the remaining defense 

agencies.19

 17GAO, Defense Acquisitions: Further Action Needed to Better Implement Requirements 

for Conducting Inventory of Service Contract Activities, GAO-11-192 (Washington, D.C.: 

Jan. 14, 2011).

18GAO, Defense Acquisitions: Further Actions Needed to Improve Accountability for 

DOD’s Inventory of Contracted Services, GAO-12-357 (Washington, D.C.: Apr. 6, 2012).

19GAO-12-357.

Prior GAO Work
Page 11 GAO-15-88 Defense Contractors

In May 2013, we reported that a November 2012 memorandum stated 

that DOD would establish a common data collection system based on the 

Army’s CMRA system—the Enterprise wide Contractor Manpower 

Reporting Application (ECMRA)—for DOD components to begin reporting 

data in time for the department’s fiscal year 2013 inventory submission, 

but did not expect that components would fully use the system for most of 

their contracts for services until fiscal year 2016.20 We found that the 

department had taken steps to implement interim CMRA-based data 

collection systems for the Air Force and Navy. At that time, DOD noted 

that it expected to field an interim CMRA-based data collection system 

that would be shared by the remaining defense agencies, which DOD 

subsequently fielded in September 2013. In May 2014, however, we 

found that while the department took interim steps, it had not fully 

implemented the common data collection system as called for in its 

November 2011 plan.21

We found that DOD components’ 2012 inventory review certifications 

better addressed DOD’s required reporting elements than in prior years, 

but the department continues to face challenges in assuring that all DOD 

components conduct and report on the required reviews. For example, as 

of September 2014, 32 of the 33 components certified that they had 

reviewed their inventory of contracted services and, overall, more 

components addressed more of DOD’s required reporting elements than 

in fiscal year 2011. However, the Air Force, which accounts for about 20 

percent of DOD’s obligations for contracted services, did not submit a 

certification letter, as required. Further, the Army, which represents 30 

percent of DOD’s obligations for contracted services, submitted a 

certification though its review was incomplete at the time the Secretary of 

the Army signed the letter. This occurred, in part, because it did not 

include a review of functions in one command or review functions that 

were transferred between two commands. DOD also continues to face 

challenges in fully implementing the CMRA-based common data system 

that is intended to collect the required data for the inventories DOD 

components must review, thus jeopardizing its plan to have all 

components using this system to collect manpower data reported by 

 20GAO-13-491.

21GAO, Defense Acquisitions: Update on DOD’s Efforts to Implement a Common 

Contractor Manpower Data System, GAO-14-491R (Washington, D.C.: May 19, 2014).

Components Better 

Addressed Reporting 

Requirements in 

Fiscal Year 2012, but 

Some Reviews Were 

Incomplete
Page 12 GAO-15-88 Defense Contractors

contractors by 2016. DOD recently directed a study to identify and 

develop other enterprise solutions to address the inventory data collection 

requirements by December 2014. It is uncertain whether DOD will 

continue to implement its previous plan for a DOD-wide system based on 

the Army’s CMRA system.

DOD’s February 2013 guidance for the fiscal year 2012 inventory, issued 

jointly by AT&L and P&R, included two changes that DOD officials 

believed would improve the completeness and granularity of the inventory 

review data reported in the certification letters from the prior year. The 

changes included an increase in the percentage of contract functions to 

review from the component’s inventories from 50 percent to 80 percent 

and one additional data element—the review results table. The guidance 

instructed components to include at a minimum seven elements in their 

certification letters (see table 2).

Fiscal Year 2012 Review 

Results Demonstrate 

Improved Reporting, but 

Challenges Remain
Page 13 GAO-15-88 Defense Contractors

Table 2: DOD’s Guidance for Completing the Review of the Fiscal Year 2012 Inventory of Contracted Services 

Information to be included in component certification letters based on a minimum review of 80 percent of contract 

functions

• an explanation of the methodology used to conduct the 

reviews and criteria for selection of contracts to review;

• the identification of any inherently governmental 

functions or unauthorized personal services contracts, 

with a plan of action to either divest or realign such 

functions to government performance;

• the identification of contracts under which closely 

associated with inherently governmental functions are 

being performed and an explanation of steps taken to 

ensure appropriate government control and oversight of 

such functions, or if necessary, a plan to either divest or 

realign such functions to government performance;

• the actions being taken or considered with regards to 

annual program reviews and budget processes to 

ensure appropriate reallocation of resources based on 

the reviews conducted;

• delineation of the results in accordance with all applicable title 

10 provisions and the guidance;

• the identification of contracted services that are exempt from 

private sector performance in accordance with DOD Instruction 

1100.22, which establishes policies and procedures for 

determining the appropriate manpower mix; require special 

consideration under 10 U.S.C. § 2463; or are being considered 

for cost reasons, to be realigned to government performance;

• a review results table showing the number of full time 

equivalents and associated invoiced dollars with the following 

categories: inherently governmental functions; closely 

associated with inherently governmental functions; critical 

functions, unauthorized personal services lacking statutory 

authority; authorized personal services; and commercial 

functions. The guidance noted that this table should be 

accompanied by a narrative explaining the degree to which the 

functions are Overseas Contingency Operation funded or 

reimbursable functions not currently included in a component’s 

budget estimate for contracted services.

Source: GAO analysis of DOD’s guidance.| GAO-15-88.

Note: Italicized text reflects changes from DOD’s fiscal year 2011 inventory review guidance.

Overall, we found DOD components generally addressed more of the 

required elements in their fiscal year 2012 certification letters than they 

had in fiscal year 2011 (see table 3).
Page 14 GAO-15-88 Defense Contractors

Table 3: Components’ reporting of required data elements in certification letters for fiscal years 2011 and 2012

Fiscal Year 

2011a

Percent of 

components 

reporting in 

fiscal year 2011

Fiscal Year 

2012b

Percent of

components 

reporting in 

fiscal year 2012

Total number of components required to submit a 

certification letter 31 33

Number of required elements 6 7

Number of components reporting required elements

At least 1 element 29 94 32 97

At least 2 elements 27 87 31 94

At least 3 elements 24 77 31 94

At least 4 elements 15 48 30 91

At least 5 elements 5 16 26 79

At least 6 elements 0 0 16 48

At least 7 elements N/A N/A 7 21

Source: GAO analysis of DOD component certification letters for fiscal years 2011 and 2012; GAO-13-491 | GAO-15-88.

a

The Defense Microelectronics Activity and US Forces Korea did not submit a certification letter for 

fiscal year 2011; however, both provided letters in fiscal year 2012.

b

The Air Force did not submit a certification letter for fiscal year 2012.

Our analysis found that seven components, representing about 15 

percent of the total dollars included in the department’s inventory of 

contracted services, addressed all seven elements required, and nearly 

80 percent of the components addressed at least five of the seven 

elements. We found that about one-third of the components did not 

address the required element to identify the appropriate manpower mix 

and about half did not address the required element to identify actions 

taken to ensure appropriate reallocation of resources based on the 

reviews.

While this represents an improvement over the inventory review results 

reported in the fiscal year 2011 certification letters, we also found several 

significant limitations with the fiscal year 2012 inventory results reported 

in the certification letters. For example,

• The Air Force, which represented about 20 percent of DOD’s contract 

obligations for services in fiscal year 2012, did not submit a 

certification letter. Air Force officials stated that they focused on 

completing the fiscal year 2013 inventory review rather than 

submitting the required fiscal year 2012 certification letter.
Page 15 GAO-15-88 Defense Contractors

• The Army, which accounted for about 30 percent of DOD’s contract 

obligations reported in DOD’s fiscal year 2012 inventory for contracted 

services, certified in its April 2014 letter that it reviewed more than 80 

percent of contracted functions from its inventory, which an Army 

official told us was based on contract invoice amount.

22 However, the 

data supporting the certification letter revealed issues at three Army 

commands that comprise more than a quarter—or $23.4 billion—of 

the Army’s reported invoiced dollars, indicating that the Army may 

have overstated the contract functions reviewed. For example, the 

certification letter did not include review data from the Army 

Acquisition Support Command because their review was not complete 

when the Army submitted its certification letter. This command 

represented $10.7 billion, or 14 percent, of the Army’s total invoiced 

dollars for contracted services reported in fiscal year 2012. Further, 

the Army Installation Management Command, which accounted for 30 

percent of Army’s reported contractor FTEs performing closely 

associated with inherently governmental functions in fiscal year 2011, 

transferred responsibility for some of these functions to the Army 

Materiel Command. However, officials at the Army Materiel Command 

reported that they did not include these transferred functions in the 

fiscal year 2012 review, stating that there were too many new 

contracts to review in one year. The officials added that for this and 

other reasons, the command’s review data for fiscal year 2012 are not 

complete or accurate.

• While 21 of the 32 components certified that they reviewed at least 80 

percent of contract functions, we found that components interpreted 

contract functions differently. DOD’s February 2013 guidance for the 

fiscal year 2012 inventory required components to review at least 80 

percent of the functions associated with all contracts, task orders, 

delivery orders, or interagency acquisition agreements listed in the 

inventory. The guidance further states that priority shall be given to 

contracts previously not reviewed or those that may present a higher 

risk of inappropriate performance. However, the guidance does not 

specify how to determine the percent of contract functions nor identify 

what types of contracts may be at a higher risk of inappropriate 

performance. As such, some components specified that they reviewed 

a percentage of product service codes, contract obligations, individual 

contracts, or contractor FTEs identified in their inventories. In other 

 22The Army reports invoiced dollar amounts from its CMRA system in its inventory of 

contracted services rather than obligations from FPDS-NG.
Page 16 GAO-15-88 Defense Contractors

cases the letters did not indicate what the component considered a 

contract function.

• Certification letters also varied in terms of the information and insights 

provided on the methodologies used to review the selected contract 

functions in the inventories, and it was not clear from the letters 

whether all components considered contractor performance and 

contract administration when reviewing selected contracts. DOD’s 

February 2013 guidance for the fiscal year 2012 inventory requires 

components to consider the nature of contract performance and 

administration, but it does not define what processes may be used to 

review functions to determine the types of activities performed. For 

example, one component’s review compared inventory data to basic 

information in the component’s contract writing system and relied on 

the component’s acquisition planning process to determine how the 

contract was performed. At another component, the review included 

coordination with program managers, contracting officers, contracting 

officer representatives, and budget officials and consideration of a 

range of data and documents to identify and understand whether the 

work performed under the contract included inappropriate functions. 

One component we interviewed, the Army, provided additional details 

in its guidance on which officials should participate in the review and 

how to assess contract activities. The Army requires a checklist at 

various points in the contract cycle, including contract award and 

modification, to identify activities performed under the contract and 

help inform the inventory review process. The Army requires the 

reviewer to be a person in the requiring activity who is familiar with 

how the contract is administered and performed and thoroughly 

understands the work being performed.

• Some officials we interviewed expressed confusion over the various 

functional categories in the review results table and noted that the 

distinction between inherently governmental, closely associated with 

inherently governmental, and personal services is not always clearly 

understood. Officials we interviewed at four of the six components 

provided supplemental inventory review guidance including definitions 

for some of the functions to help define inappropriate performance or 

contract activities that require additional management attention.

The lack of specific guidance on how to identify or review contract 

functions may have led to components understating the degree to which 

contractors were providing services closely associated with inherently 

governmental functions. Fifteen of the 32 components identified 

contractors performing closely associated with inherently government 

functions in the fiscal year 2012 inventory and provided more specific 

Components May Have 

Understated Contractors 

Performing Certain 

Functions
Page 17 GAO-15-88 Defense Contractors

information on contractor FTEs performing these functions than in fiscal 

year 2011. For example, eight components reported that they had 

contracts containing these functions in their fiscal year 2011 certification 

letters without providing specific information on the number of contractor 

FTEs. In their fiscal year 2012 certification letters, however, these eight 

components identified the specific number of contractor FTEs and 

obligations associated with these functions. Another 15 components 

certified they did not have contractors performing closely associated with 

inherently governmental functions, while two components’ certification 

letters did not address closely associated with inherently governmental 

functions. Appendix II provides details on components that identified 

contractors performing inherently governmental functions.

In May 2013, we found it was difficult to determine how many contractors 

are performing closely associated with inherently governmental functions 

based on components’ reported methodologies and inventory review 

results. Further, we found that DOD components may not have accurately 

identified the extent to which their contractors are performing closely 

associated with inherently governmental functions during their reviews.23

Based on our latest review of the fiscal year 2012 inventory review 

results, it is still not clear whether DOD components fully identified the 

extent to which their contractors are performing closely associated with 

inherently governmental functions.

Our latest review, similar to our prior work, found that DOD contracts for 

significant amounts of professional and administrative and management

support services. A significant portion of contracts for these services were 

for services that are likely to be closely associated with inherently 

governmental functions. We identified total obligations for categories of 

contracted services that often include services closely associated with 

inherently governmental functions based on DOD components’ fiscal year 

2012 inventory submission data.24 We compared those totals to the total 

 23GAO-13-491.

24We used Office of Federal Procurement Policy (OFPP) guidance and our prior work to 

identify product service codes associated with contracts that often include closely 

associated with inherently governmental functions. OFPP, Memorandum for Chief 

Acquisition Officers and Senior Procurement Executives, Service Contract Inventories, 

November 5, 2010 and GAO, Managing Service Contracts: Recent Efforts to Address 

Associated Risks Can Be Further Enhanced, GAO-12-87, (Washington, D.C. Dec. 7, 

2011).
Page 18 GAO-15-88 Defense Contractors

obligations certified by DOD components as being for contractors 

performing closely associated with inherently governmental functions in 

the fiscal year 2012 certification letters. This analysis found significant 

gaps between these two categories, suggesting that some of the 

inventory review processes or methodologies may not be sufficient to 

accurately identify closely associated with inherently governmental 

functions. In contrast to the Navy and other defense agencies, even the 

Army’s incomplete review identified that nearly half of its total obligations 

in these categories were for the performance of closely associated with 

inherently governmental functions (see figure 2).25

 25As we previously reported, the Army has a two-pronged approach to reviewing the 

activities in the inventory. First, it uses a pre-award process that includes detailed 

checklists to help assess whether the proposed contract includes services that are 

inherently governmental functions or inappropriate personal services, and to identify 

services that are closely associated with inherently governmental functions. Second, the 

Army uses a post-award review, the Panel for Documentation of Contractors, to review 

information provided by commands to make certain determinations such as whether a 

contractor’s performance of closely associated with inherently governmental functions has 

evolved into the performance of inherently governmental functions. The Panel for 

Documentation of Contractors also evaluates whether sufficient in-house capacity exists 

to oversee the contracted workforce. GAO-13-491. 
Page 19 GAO-15-88 Defense Contractors

Figure 2: Comparison of Total Obligations for Contracts Which Often Involve 

Closely Associated with Inherently Governmental Functions to Obligations 

Reported for These Functions In Fiscal Year 2012 Inventory Certification Letters

With regard to identifying contractor FTEs that may be performing 

inherently governmental functions or unauthorized personal services, only 

the Army identified such contractors during their fiscal year 2012 

inventory review. The Army reported that it had identified 62 contractor 

FTEs performing inherently governmental functions and five contractor 

FTEs providing unauthorized personal services, both figures representing 

significant declines since fiscal year 2011. As noted previously, however, 

we found the Army’s review of its fiscal year 2012 inventory may not have 

included the minimum requirement of 80 percent of contract functions. 

While the Air Force did not submit a certification letter in fiscal year 2012, 

Air Force officials told us that they had incorrectly identified contractors 

performing inherently governmental functions and unauthorized personal 

services in their 2011 inventory review.

However, neither the Army nor the Air Force provided information as to 

how they resolved the prior instances in which they found that contractors 

were performing such functions. We previously recommended in May 
Page 20 GAO-15-88 Defense Contractors

2013 that the Secretary of Defense instruct components to provide 

updated information in certification letters on how they resolved the 

instances of contractors performing inherently governmental functions or 

unauthorized personal services identified in prior inventory reviews.26

DOD partially concurred with this recommendation, stating that DOD 

would focus on the fiscal year 2012 reporting requirements and that any 

instances of contractors performing inherently governmental functions or 

unauthorized personal services that persist from prior inventory reviews 

would be included and fully documented in the fiscal year 2012 and future 

inventory review processes. Further, DOD said it would verify that the 

certification letters contain a complete and accurate description of actions 

taken to resolve outstanding issues related to contractors performing 

these functions prior to closing the review process.

Federal internal control standards call for managers to measure and 

assess performance over time to ensure effectiveness and efficiency of 

operations and compliance with applicable laws and regulations.27

Without accurate identification of the functions contractors are performing, 

DOD cannot be assured that proper oversight is in place or provide data 

to ensure that it is meeting statutory requirements to reduce, to the 

maximum extent practicable, the number of contractors performing 

closely associated with inherently governmental functions or assure that 

contractors are not performing inherently governmental functions.

DOD issued guidance applicable to the components’ fiscal year 2013 

inventories in March 2014. To assist components’ reviews, this guidance

provides definitions for inherently governmental, closely associated with 

inherently governmental, personal services, and critical functions, 

consistent with the FAR and the Office of Federal Procurement Policy 

(OFPP) guidance.28 DOD’s guidance, however, does not specify the 

percent of contract functions to be reviewed nor identify the basis to 

determine the percentage of contract functions to be reviewed. P&R 

officials indicated that the intent is for components to review all contract 

 26GAO-13-491.

27GAO, Auditing and Financial Management: Standards for Internal Control in the Federal 

Government, GAO/AIMD-00-21.3.1 (Washington, D.C. Nov. 1, 1999).

28OFPP Policy Letter 11-01, Performance of Inherently Governmental and Critical 

Functions, 76 Fed. Reg. 56227. 

Fiscal Year 2013 

Guidance Does Not 

Address All Reporting 

Challenges
Page 21 GAO-15-88 Defense Contractors

functions; however, some component officials we interviewed said it was 

not clear to them. The March 2014 guidance also indicates that 

components should review the nature or way the contract is performed 

and administered as well as the organizational environment within which 

it is operating beyond what can be accessed via a review of the 

information listed within the inventory, but does not provide specific 

approaches to do so.

A key factor to facilitate the components’ review of the functions that 

contractors perform is the availability of accurate and reliable data. As we 

reported in May 2014, DOD officials noted that the lack of dedicated 

resources has been a key factor hindering implementation of its planned 

ECMRA, the common data system based on the Army’s CMRA system.29

To address this factor and support the data collection efforts, DOD 

provided funding for six civilian FTEs for the Defense Human Resources 

Agency, starting in fiscal year 2015. We reported in May 2014 that DOD 

officials had anticipated these staff would comprise a new support office 

to coordinate DOD’s efforts to define business processes for compiling, 

reviewing, and using the inventory. This effort has encountered a number 

of challenges, which officials noted may jeopardize the department’s goal 

to fully implement ECMRA by fiscal year 2016. For example, the effort 

lacks a formal agreement, including roles and responsibilities, between 

the Assistant Secretary of Defense for Readiness and Force 

Management and the Defense Human Resources Agency, the parties 

responsible for implementing ECMRA and related business processes. 

As we concluded in our May 2014 report, DOD did not have a 

comprehensive plan with timeframes and milestones to measure its 

progress toward developing a common contractor manpower data system 

and associated business processes.

More recently, a September 17, 2014 memorandum from the Acting 

Assistant Secretary of Defense for Readiness and Force Management 

appointed a Strategic Review and Planning Officer as the official 

responsible for identifying and developing enterprise solutions related to 

the inventory data collection requirements prescribed by title 10, U.S. 

Code, section 2330a. The official is authorized to identify, develop, and 

consider all reasonable options, in both the short and long-terms, and 

 29GAO-14-491R.

Uncertainties Continue in 

Implementing a Common 

Manpower Reporting Data 

System
Page 22 GAO-15-88 Defense Contractors

propose courses of action by December 1, 2014 to P&R. Once a course 

of action is approved, the memorandum directs the official to develop a 

detailed implementation plan, but does not provide timeframes for 

completion. A P&R official told us that, until such time as there has been 

a decision whether to pursue a new approach or continue forward with 

implementation of ECMRA, DOD will defer using the additional resources 

allocated for the Defense Human Resources Agency. This review raises a 

question about whether DOD will continue to implement a DOD-wide 

inventory data collection system modeled after the Army’s CMRA system 

or attempt to develop a new system. Until such time as DOD components 

are able to collect the required data for their inventories, the utility of their 

inventory reviews for making workforce mix decisions will be hindered.

The military departments have not developed plans or enforcement 

mechanisms to use the inventory of contracted services to inform 

strategic workforce planning, workforce mix, and budget decision-making 

processes, as statutorily required. Despite the lack of specific plans, the 

military departments have taken some initial steps to use the inventory to 

inform management decisions such as insourcing and estimating FTEs 

for budgetary purposes. Disparate offices are responsible for the various 

decision-making processes at the military departments, and the 

secretaries of the military departments have not assigned specific 

responsibility for coordinating among these offices to develop plans to 

use the inventory to inform such decisions. In part, the absence of 

accountable officials to integrate the use of the inventory leaves the 

department at continued risk of not complying with the applicable 

legislative requirements to use the inventory to support management 

decisions.

P&R has overall responsibility for developing and implementing DOD’s 

strategic workforce plan to shape and improve the DOD’s civilian 

workforce, including an assessment of the appropriate total force mix. 

P&R issued guidance that designated responsibility for the development 

of the strategic workforce plan to the Deputy Assistant Secretary of 

Defense for Civilian Personnel Policy, but did not require use of the 

inventory. This guidance predates the statutory requirement to use the 

inventory to inform strategic workforce planning. For example, the Fiscal 

Years 2013-2018 Strategic Workforce Plan, the most recent plan 

available at the time of our review, states that DOD’s plans for identifying 

and assessing workforce mix will leverage the inventory of contracted 

services, but does not provide any additional details on using the 

inventory.

The Military 

Departments Have 

Not Developed 

Statutorily Required 

Plans or Identified 

Specific 

Responsibilities to 

Facilitate the Use of 

the Inventory

Strategic Workforce 

Planning, Workforce Mix, 

and Insourcing Guidance 

Decisions Generally Do 

Not Require the Use of the 

Inventory
Page 23 GAO-15-88 Defense Contractors

None of the three military departments has developed a statutorily 

required plan or enforcement mechanism to use the inventory of 

contracted services and generally they have not developed guidance or 

processes for these purposes (see table 4).

Table 4: Strategic Workforce Planning Guidance and Processes at the Three Military Departments

Air Force Army Navy

Plans and 

enforcement 

mechanisms

No documented plan and enforcement mechanism to provide for the use of the inventory of contracted 

services.

Guidance No department-unique strategic 

workforce guidance. The Air Force 

issued a broad framework in July 

2014 to guide long-range planning, 

but it does not mention the inventory 

of contracted services.

No department-unique strategic 

workforce guidance.

No department-unique 

strategic workforce 

guidance.

Processes Air Force acquisition and manpower 

officials report that data derived from 

the inventory – such as contractor 

name, direct labor hours, and full-time 

equivalents – are entered into a 

manpower document to provide 

historical perspective on where 

contracts were performed. The 

inventory data are not used in a 

planning capacity.

No processes in place to use the 

inventory to inform strategic workforce 

planning.

In 2012, the Navy formed a 

Total Force Integration 

Board for managing the total 

force. The charter for this 

board, however, does not 

mention the inventory of 

contracted services and a 

manpower official reported 

that the board does not meet 

regularly.

Source: GAO analysis of military department guidance and processes| GAO-15-88

DOD has two department-wide policies for determining workforce mix—

DOD directive 1100.4 and DOD instruction 1100.22—but neither currently 

requires the use of the inventory to inform workforce mix planning. DOD 

Directive 1100.4, dated February 2005, provides general guidance 

concerning determination of manpower requirements, managing 

resources, and manpower affordability. According to P&R officials,

revisions to this directive, which are currently under review, will be revised 

to explicitly require use of the inventory to inform budgeting and total 

force management decisions. DOD Instruction 1100.22, dated April 2010, 

provides manpower mix criteria and guidance for determining how 

individual positions should be designated based on the work performed. 

This instruction does not direct the military departments to develop a plan 

to use the inventory to inform management decisions, as DOD issued it 

before the enactment of the requirement for developing such plans.
Page 24 GAO-15-88 Defense Contractors

DOD’s primary insourcing guidance is reflected in April 4, 2008 and May 

28, 2009 memoranda.30 These memoranda reiterate statutory 

requirements by calling for DOD components and the military 

departments to use the inventory of contracted services to identify 

functions for possible insourcing and to develop a plan for converting 

these functions within a reasonable amount of time. Among the military 

departments, however, only Army has guidance and a process that 

requires use of the inventory of contracted services for insourcing. 

However, the military departments have not issued guidance for 

managing workforce mix that requires the use of the inventory of 

contracted services (see table 5).

 30The insourcing memoranda are the April 4, 2008 memorandum, “Implementation of 

Section 324 of the National Defense Authorization Act for Fiscal Year 2008 (FY 2008 

NDAA)—Guidelines and Procedures on In-Sourcing New and Contracted Out Functions”

and the May 28, 2009 memorandum, “In-Sourcing Contracted Services – Implementation 

Guidance.”
Page 25 GAO-15-88 Defense Contractors

Table 5: Role of the Inventory of Contracted Services in Existing Workforce Mix and Insourcing Guidance and Processes at 

the Three Military Departments

Air Force Army Navy

Plans and 

enforcement 

mechanisms

No documented plan and enforcement mechanism to provide for the use of the inventory of contracted 

services

Guidance Three Air Force Instructions—38-201, 

issued in January 2014, and 38-2 and 

38-203 issued and updated in 

February 2013, respectively—provide 

guidance on complying with DOD’s 

manpower mix policy, but do not 

discuss the inventory of contracted 

services in a planning capacity.

Army Regulation 570-4 “Manpower 

Management” issued in February 

2006 implements DOD’s manpower 

mix directive, but pre-dates the 

requirements of subsection (f) and 

does not discuss the inventory of 

contracted services in a planning 

capacity.

Army’s July 2009 memorandum, 

“Army Policy for Civilian Workforce 

Management and Service Contracts,”

identifies responsibility for 

development and execution of Army 

in-sourcing plans based on the 

inventory of contracted services.

Army’s May 2013 In-Sourcing 

Approval Authority memorandum 

provides guidance on the process for 

using the inventory of contracted 

services to inform in-sourcing actions.

The Office of the Chief of 

Naval Operations’ Instruction 

1000.16K, updated in October 

2011, mentions use of the 

inventory of contracted 

services as a total workforce 

tool and provides some 

guidance on using the 

inventory to determine 

whether a function can be 

contracted. While this 

instruction links to the 

inventory of contracted 

services, it is not departmentwide, as it does not apply to 

he Marine Corps.

Processes Air Force officials stated that the 

department holds service contract 

review boards which have a role in 

the requirement approval process, 

among other things. According to the 

officials the review is in the beginning 

stages. However, it is not using the 

inventory to inform workforce mix and 

insourcing decisions. 

Army uses the Panel for 

Documentation of Contractors review 

process to determine whether to 

insource a contracted function.

Additionally, Army uses the Services 

Contract Approval Form, developed in

2009, to inform contract award and 

insourcing decisions. 

Navy is implementing DOD 

wide policy through its 

Service Requirement Review 

Boards, which include a 

process to consider whether 

requirements encompass 

inherently governmental or 

closely associated with 

inherently governmental 

functions, among other 

things, but does not require 

use of the inventory of 

contracted services to do so.

Source: GAO analysis of DOD guidance and processes | GAO-15-88
Page 26 GAO-15-88 Defense Contractors

DOD’s Financial Management Regulation provides, among other things,

guidance to the military departments on budget formulation and 

presentation; however, these regulations do not require the military 

departments to use the inventory in formulating and presenting their 

budgets.31 At the military department level, the Air Force has issued 

additional instructions in terms of budget formulation and presentation.

However, the Air Force’s guidance does not require the use of the 

inventory.

The Comptroller has issued supplemental guidance requiring, among 

other things, that the military departments and defense components 

provide information on the number of FTEs as required under 10 U.S.C. § 

235, but this guidance does not require reporting the amount of funding

requested for contracted services. The Comptroller guidance for budget 

submissions from all components has remained similar for the past three 

fiscal years, instructing DOD components to ensure that contractor FTEs 

reported in the budget exhibit are consistent with those in the DOD’s 

inventory of contracted services.32 Both Navy and Air Force officials 

reported that they used the inventory of contracted services to estimate 

the number of contractor FTEs for inclusion in their budget request. The 

Army budget office does not have a process to use the inventory to inform 

budgeting and could not identify how the Army estimated FTEs in the 

Army’s budget submission (see table 6).

 31DOD 7000.14-R Department of Defense Financial Management Regulation.

32The Comptroller’s guidance was issued in three memoranda: the December 16, 2011 

memorandum, “Fiscal Year (FY) 2013 President’s Budget Submission”; the February 5, 

2013 memorandum, “Fiscal Year (FY) 2014 President’s Budget Submission”; and the 

January 29, 2014 memorandum, “Fiscal Year (FY) 2015 President’s Budget Submission”.

Programming and Budget 

Decisions Generally Do 

Not Require the Use of the 

Inventory, Though Data on 

Estimated Contractor 

FTEs Are Included in the 

Budget
Page 27 GAO-15-88 Defense Contractors

Table 6: Role of the Inventory of Contracted Services in Existing Budgeting Guidance and Processes at the Three Military 

Departments

Air Force Army Navy

Plans and 

enforcement 

mechanisms

No documented plan and enforcement mechanism to provide for the use of the inventory of contracted 

services

Guidance Air Force Instructions 65-601, 

Volumes 1-3 on financial 

management do not link to using the 

inventory of contracted services. The 

Air Force also follows guidance 

issued by the DOD Comptroller.

No Army specific budget 

guidance. The Army follows 

guidance issued by the DOD 

Comptroller.

No Navy specific budget 

guidance. The Navy follows 

guidance issued by the DOD 

Comptroller. 

Processes

Budget Formulation and 

Execution

Estimating Contractor 

Full-time Equivalents 

(FTEs)

The Air Force does not have a 

process for using the inventory of 

contracted services for budget 

formulation and execution.

To estimate contractor FTEs, the Air 

Force budget office uses the 

inventory to arrive at average cost of 

contractors. The Air Force then 

divides the contractor dollar amounts 

reported in the budget submission to 

arrive at an estimated number of 

contractor FTEs and submits this 

number for the DOD budget exhibit. 

The Army does not have a 

process for using the inventory of 

contracted services for budget 

formulation and execution.

The Army budget office does not 

use the inventory of contracted 

services to inform budgeting or 

estimate contractor FTEs. 

The Navy does not have a 

process for using the inventory 

of contracted services for 

budget formulation and 

execution.

To estimate contractor FTEs, 

the Navy budget office uses 

the inventory to arrive at 

average cost of contractors. 

The Navy then divides the 

contractor dollar amounts 

reported in the budget 

submission to arrive at an 

estimated number of contractor 

FTEs and submits this number 

for the DOD budget exhibit.

Source: GAO analysis of DOD programming and budget guidance | GAO-15-88.

Within the military departments various offices are responsible for 

conducting the compilation and review of the inventory of contracted 

services, managing workforce mix decisions, and conducting budgeting 

(see table 7).

Within the Military 

Departments, 

Responsibility for 

Developing a Plan to Use 

the Inventory for 

Management Decisions is 

Not Clearly Assigned
Page 28 GAO-15-88 Defense Contractors

Table 7: Offices Responsible for Workforce Planning, Budgeting, and the Inventory of Contracted Services at the Military 

Departments

Air Force Army Navy

Inventory of Contracted 

Services

Assistant Secretary of the Air Force 

for Acquisition

Army Manpower and Reserve 

Affairs

Navy Research, Development, 

and Acquisition

Strategic Workforce 

Planning

Deputy Chief of Staff, Manpower, 

Personnel, and Services

Assistant Secretary of the Air Force 

for Manpower and Reserve Affairs 

Army Manpower and Reserve 

Affairs

Navy Manpower and Reserve 

Affairs

Manpower 

Mix/Insourcing

Deputy Chief of Staff, Manpower, 

Personnel, and Services

Assistant Secretary of the Air Force 

for Manpower and Reserve Affairs

Army Manpower and Reserve 

Affairs

Assistant Secretary of the Army 

for Acquisition, Logistics, and 

Technology 

Navy Manpower and Reserve 

Affairs

Navy Research, Development, 

and Acquisition

Budgeting [including 

forecasting and 

execution]

A8 Office, Strategic Plans and 

Programs

Air Force Financial Management and 

Comptroller

G8, Program Analysis & 

Evaluation

Army Financial Management and 

Comptroller

N8, Integration of Capabilities 

and Resources

Navy, Financial Management 

and Comptroller

Source: GAO analysis of DOD guidance and processes| GAO-15-88

Based on our analysis, however, no single office or individual is 

responsible for leading or coordinating efforts between the various 

functional areas to develop a plan and enforcement mechanism to use 

the inventory to inform these processes. During interviews, officials at 

each of the military departments were uncertain who was responsible for 

developing a plan and enforcement mechanisms to use the inventory to 

inform management decisions. For example, the Assistant Secretary of 

the Army for Acquisition, Logistics, and Technology indicated that the 

responsibility for developing the Army’s plan fell to the manpower 

community, but a manpower official stated his office is not explicitly 

tasked with this responsibility. Internal control standards in the federal 

government state that management should establish an organizational 

structure, delegate authority for key roles, and assign responsibility to 

enable an organization to achieve management objectives and to comply 

with laws.33 The absence of clearly defined roles and responsibilities for 

integrating the use of the inventory in these processes, as appropriate, 

leaves the department at continued risk of not complying with the 

 33GAO/AIMD-00-21.3.1.
Page 29 GAO-15-88 Defense Contractors

applicable legislative requirements to leverage the inventory to support 

management decisions.

In the six years since DOD first submitted its initial department-wide 

inventory of contracted services and conducted the associated reviews, 

DOD’s progress remains uneven and uncertain. DOD components 

addressed more of the reporting elements prescribed by P&R and AT&L 

guidance, but it is less clear that the fiscal year 2012 reviews were any 

more informative than prior reviews in certain key areas. The Air Force 

failed to submit an inventory review certification letter while the Army 

submitted incomplete review data for several major commands. In 

addition, DOD components may not have fully identified all instances of 

contractors performing closely associated with inherently governmental 

functions. DOD’s fiscal year 2013 guidance does not fully address some 

of the shortcomings our review identified, including how to identify 

contracts to review or the methodologies or approaches to use to ensure 

the components’ inventory reviews adequately assess contractor 

activities. As a result, components may not fully identify instances of 

contractors providing services that are closely associated with inherently 

governmental functions. Without a thorough review of contractor 

activities, DOD risks becoming overly reliant on contractors to support 

core missions.

Further, it is up to the department to provide a system that is capable of 

providing accurate and reliable data to support these reviews. Continued 

delays and uncertainties in implementing its planned ECMRA system 

hinder achievement of this objective. We had previously recommended 

that DOD develop a plan of action with timeframes and milestones to 

measure DOD’s progress in implementing a common data system, but 

DOD has yet to do so. DOD identified the lack of dedicated resources as 

the primary obstacle to resolving technical issues, including help desk 

support and establishing common processes across the department. 

DOD allocated fiscal year 2015 funding to support this effort; however, 

DOD is delaying committing these resources pending the completion of a 

review to identify and develop appropriate enterprise solutions, including 

short- and long-term options, no later than December 1, 2014. Continued 

delays in developing an implementation plan increases the risk that DOD 

will be unable to collect the statutorily required data needed to serve as 

the basis for DOD’s inventory review process.

Additionally, the military departments generally do not have plans to use 

the inventories for strategic workforce planning, workforce mix and 

Conclusions
Page 30 GAO-15-88 Defense Contractors

insourcing decisions, or budget and programming decisions. The same is 

generally true for the processes that underlie these decisions, with the 

exception of the Army’s efforts to use the inventory and associated review 

process to help inform workforce mix and insourcing decisions. One 

factor contributing to this condition is the fact that multiple offices are 

responsible for performing tasks within their specific area of responsibility, 

but there are no offices or individuals that have been specifically tasked to 

lead or coordinate efforts to facilitate the use of the inventory within each 

of the military departments. Internal control standards state that 

management should establish an organizational structure, delegate 

authority for key roles, and assign responsibility to enable an organization 

to achieve management objectives and to comply with laws. Entrusting 

one or more individuals with the responsibility for carrying out these 

requirements is likely to produce more positive results quicker than if 

DOD continues to engage in piecemeal and ad hoc efforts within each 

functional area. The absence of clearly defined roles and responsibilities 

for integrating the use of the inventory in these processes, as appropriate, 

leaves the department at continued risk of not complying with the 

applicable legislative requirements to leverage the inventory to support 

management decisions.

To better implement the requirements for reviewing the inventory of 

contracted services, we recommend that the Under Secretary of Defense 

for Acquisition, Technology and Logistics and the Under Secretary of 

Defense for Personnel and Readiness work jointly to revise annual 

inventory review guidance to clearly identify the basis for selecting 

contracts to review and to provide approaches the components may use 

to conduct inventory reviews that ensure the nature of how the contract is 

being performed is adequately considered. If DOD intends for 

components to review less than 100 percent of its contracts, then the 

guidance should clearly identify the basis for selecting which contracted 

functions should be reviewed.

To help facilitate the department’s stated intent to develop a common 

data collection system to fully collect statutorily required data, we 

recommend that the Under Secretary of Defense for Personnel and 

Readiness approve a plan of action, with timeframes and milestones, for 

rolling out and supporting a department-wide data collection system as 

soon as practicable after December 1, 2014. Should a decision be made 

to use or develop a system other than the e-CMRA system currently 

being fielded, we recommend that the Under Secretary of Defense for 

Personnel and Readiness document the rationale for doing so and ensure 

Recommendations for 

Executive Action
Page 31 GAO-15-88 Defense Contractors

that the new approach will provide data that satisfies the statutory 

requirements for the inventory.

To help ensure that the inventory of contracted services is integrated into 

key management decisions as statutorily required, we recommend that 

the Secretaries of the Army, Navy, and Air Force identify an accountable 

official within their departments with responsibility for leading and 

coordinating efforts across their manpower, budgeting, and acquisition 

functional communities and, as appropriate, revise guidance, develop 

plans and enforcement mechanisms, and establish processes.

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

comments, which are reprinted in appendix III, DOD concurred with our 

recommendations and described the actions it plans to take though it did 

not provide timeframes for completing such actions. DOD also provided 

technical comments, which we incorporated in the report as appropriate. 

In response to our recommendation to revise its inventory review 

guidance to provide more clarity on which contracted functions should be 

reviewed and to provide approaches the components may use to ensure 

that the nature of how the contract is being performed is considered, the 

department noted it is currently enhancing its guidance for the fiscal year 

2014 inventory of contracted services and intends to have components 

review and certify 100 percent of the services reported in their respective 

inventory. DOD did not address whether DOD’s guidance will provide 

approaches components may use to conduct inventory reviews to ensure 

contract performance is adequately considered. There may be no singular 

approach appropriate for all DOD components; however, DOD could 

provide a range of suggested approaches to ensure components 

accurately identify functions performed. While we appreciate DOD’s 

actions to address the recommendation, the fact that only seven of the 

components fully addressed each element contained in AT&L and P&R’s 

previous guidance underscores, in our view, the need for more direct 

involvement by DOD to ensure compliance. 

In response to our recommendation to approve a plan of action with 

timeframes and milestones to help facilitate the development of a 

common data collection system, DOD noted that all DOD components are 

using ECRMA to facilitate compilation of their respective inventory of 

contracted services. DOD agreed that if the Department decides to move 

away from ECMRA, the decision will be fully documented, ensuring 

satisfaction of statutory requirements. 

Agency Comments

and Our Evaluation
Page 32 GAO-15-88 Defense Contractors

In response to our recommendation to identify an accountable official 

within the military departments to help ensure the inventory of contracted 

services is integrated into key management decisions and to coordinate 

efforts across manpower, budgeting and acquisition communities, DOD 

agreed. DOD also indicated that a cognizant accountable official should 

be identified at the remaining defense components (e.g. defense 

agencies, field activities, and combatant commands). While our work in 

this area focused on the military departments, we agree that it is 

important for components across DOD to ensure each organization 

develops a plan and enforcement mechanisms for using the inventory of 

contracted services to inform management decisions. 

We are sending copies of this report to the appropriate congressional 

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

for Acquisition, Technology, and Logistics, the Under Secretary of 

Defense for Personnel and Readiness, the Secretaries of the Army, Air 

Force, and the Navy, and other interested parties. 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) 512-4841 or dinapolit@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 IV.

Timothy J. DiNapoli

Director

Acquisition and Sourcing Management
Page 33 GAO-15-88 Defense Contractors

List of Committees

The Honorable Carl Levin

Chairman

The Honorable James M. Inhofe

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Richard J. Durbin

Chairman

The Honorable Thad Cochran

Ranking Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Howard P. “Buck” McKeon

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
Appendix I: Objectives, Scope, and 

Methodology

Page 34 GAO-15-88 Defense Contractors

Section 951(a) of the National Defense Authorization Act for Fiscal Year 

2014 directs GAO to report, for fiscal years 2014, 2015, and 2016, on 

DOD’s implementation of title 10 U.S. Code section 2330a subsections 

(e) and (f).1 To satisfy the mandate for 2014, we assessed DOD’s efforts 

to (1) implement subsection (e) to review contracts and activities in the 

inventory of contracted services for the fiscal year 2012 inventory and (2) 

implement subsection (f) to develop plans and processes to inform how 

the inventory will be used to facilitate strategic workforce planning, 

workforce mix, and budget decisions. We used data from the fiscal year 

2012 inventory as it was the most recent inventory at the time of our 

review.

To assess the extent to which DOD components—to include the three 

military departments and the defense agencies— implemented the 

required review of contracts and activities in the inventory of contracted 

services pursuant to subsection(e), for the fiscal year 2012 inventory, we 

examined the guidance related to the fiscal year 2012 inventory review 

process which the Office of the Under Secretary of Defense for 

Acquisition, Technology, and Logistics (AT&L) and the Acting Under 

Secretary of Defense for Personnel and Readiness (P&R) issued on 

February 4, 2013. The February 2013 guidance requires components to 

certify completion of the review and report on seven elements including 

the contract selection criteria and methodologies used to conduct the 

reviews; the extent to which contractors were found to be performing 

certain functions, to include inherently governmental and closely 

associated with inherently governmental; and to the extent necessary, a 

plan to realign performance of such functions to government 

performance.2 We analyzed all unclassified fiscal year 2012 certification 

letters submitted by 32 components to P&R as of September 2014 to 

determine if components reported on all seven required elements. We did 

 1

Pub. L. No. 113-66 (2013).

2

In September 2014, the DOD Inspector General found that not all DOD components, as 

defined by DOD Directive 5100.01, participated in the fiscal year 2012 inventory of 

contracted services process. Further, they reported that P&R officials explained the 

decision on whether a component is required to participate in the inventory process is 

regularly assessed. The DOD Inspector General recommended that DOD identify the 

components required to submit an inventory of contracted services. Department of 

Defense Inspector General, “Independent Auditor’s Report on Agreed-Upon Procedures 

for DOD Compliance With Service Contract Inventory Compilation and Certification 

Requirements for FY 2012”, DODIG-2014-114, (Alexandria, VA: Sept. 17, 2014).

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 35 GAO-15-88 Defense Contractors

not analyze any classified certification letters submitted, such as that by 

the Defense Intelligence Agency.

We also reviewed the Office of Federal Procurement Policy’s (OFPP)

November 5, 2010 guidance for civilian agencies’ service contract 

inventories. This guidance directs agencies to give priority consideration 

to reviewing certain categories of contracted services that the guidance 

and GAO’s prior work have indicated often include closely associated with 

inherently governmental functions. The guidance identifies 15 product 

service codes describing these categories of contracted services. We 

reviewed the total amount DOD components obligated for closely 

associated with inherently governmental functions with the total amount 

they reported obligating for the categories of contracted services 

identified in the OFPP’s guidance and two additional product service 

codes identified in GAO’s prior work to compare the dollars obligated and 

contractor full-time equivalents (FTEs) reported for these product services 

codes.3 We did not independently assess the accuracy or reliability of the 

underlying data supporting the components’ inventories of contracted 

services and associated reviews. Our previous work, however, identified 

data limitations with those DOD components using data from FPDS-NG 

as the basis for their inventories.4 We discuss these limitations in the 

report, as appropriate.

In performing our work to assess the extent to which DOD implemented 

subsection (e) to review contracts and activities in the inventory of 

contracted services for the fiscal year 2012 inventory we interviewed 

cognizant officials from AT&L; P&R; the Under Secretary of Defense 

(Comptroller); the Departments of the Army, Navy, and Air Force; and 

three defense components – the Defense Logistics Agency (DLA); the 

Defense Threat Reduction Agency (DTRA), and the Office of the Director 

of Administration and Management (ODA&M). We selected the Army, 

Navy, and Air Force for additional review because they represented about 

74 percent of the obligations reported in the inventory and selected DLA 

and DTRA, because they reported having the most instances of 

 3

GAO, Managing Service Contracts: Recent Efforts to Address Associated Risks Can Be 

Further Enhanced, GAO-12-87, (Washington, D.C. Dec. 7, 2011).

4

GAO, Defense Acquisitions: Continued Management Attention Needed to Enhance Use 

and Review of DOD’s Inventory of Contracted Services, GAO-13-491 (Washington, D.C.: 

May 23, 2013).
Appendix I: Objectives, Scope, and 

Methodology

Page 36 GAO-15-88 Defense Contractors

contractors performing closely associated with inherently governmental 

functions, as expressed in contractor FTEs. We selected ODA&M 

because they reported having the fewest contractor FTEs performing 

closely associated with inherently governmental functions, despite having 

high obligations for professional services and program management 

services, two categories of contracted services known to often include 

closely associated with inherently governmental functions. 5

To assess the extent to which DOD components have developed plans 

and processes to use the inventory to inform management decisions 

pursuant to subsection (f), we reviewed defense-wide and military 

department-specific strategic planning, manpower mix, and budgeting 

documentation and interviewed officials responsible for developing and 

using this guidance. To determine whether DOD guidance informing 

strategic planning, manpower mix and budgeting calls for the use of the 

inventory of contracted services in planning processes, we reviewed the 

DOD’s Fiscal Year 2013-2018 Strategic Workforce Plan Report and 

associated guidance for completing the plan, DOD’s instruction on 

manpower mix criteria, DOD’s memoranda guiding the conversion of 

contracted functions to government functions, and guidance issued by the 

Comptroller that informed the fiscal year 2013, 2014, and 2015 budget 

submissions. When applicable we reviewed workforce mix instructions

and budgeting regulations. In addition we reviewed memoranda, slides, 

and meeting minutes to review processes that the military departments 

had underway to determine if these processes addressed the 

requirements of title 10 U.S.C. § 2330a(f).

In performing our work to assess the extent to which DOD components 

have developed plans and processes to use the inventory to inform 

management decisions pursuant to subsection (f) we interviewed 

cognizant officials from AT&L, P&R and the Comptroller, and the three 

military departments. We discussed identification of a cognizant official for 

the plans and processes with acquisition, manpower, programming, and 

budgeting officials.

 5

ODA&M is being realigned and will merge with the Office of the Deputy Chief 

Management Officer.
Appendix I: Objectives, Scope, and 

Methodology

Page 37 GAO-15-88 Defense Contractors

In addition, we evaluated DOD’s progress in implementing a common 

data system since our most recent report in May 2014.6 To do so, we 

reviewed existing documentation including memoranda, planning 

documents, and guidance for establishing a common data system. We 

also interviewed officials from P&R to discuss progress toward the 

common system and associated business processes.

We conducted this performance audit from May 2014 to November 2014 

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 audit objectives. We believe that the 

evidence obtained provides a reasonable basis for our findings and 

conclusions based on audit objectives.

 6

GAO, Defense Acquisitions: Update on DOD’s Efforts to Implement a Common 

Contractor Manpower Data System, GAO-14-491R (Washington, D.C.: May 19, 2014).
Appendix II: Comparison of Components’ 

Identification of Contractors Providing 

Services Closely Associated With Inherently 

Governmental Functions in their Fiscal Year 

2011 and 2012 Certification Letters

Page 38 GAO-15-88 Defense Contractors

Component 2011 2012

Army 44,541 27,378

Air Forcea 1,398 Did not report

Navy The Navy did not identify the number of FTEs, 

but noted they have 25 contracts that contained 

these functions.

2,524

Defense Advanced Research Projects 

Agency 

The agency did not identify the number of FTEs 

in current contracts, but noted they have 

contracts that contained these functions.

115

Defense Commissary Agency The agency did not identify the number of FTEs, 

but noted that they had contractors performing 

these functions.

0

Defense Contract Audit Agency 0 Did not report

Defense Contract Management Agency 0 2 contracts

Defense Finance and Accounting 

Service

0 0

Defense Human Resource Activity 0 0

Defense Information Systems Agency 0 0

Defense Logistics Agency The agency did not identify the number of FTEs, 

but noted that 4.5 percent of their sample of 

more than 50 percent of contract actions 

contained these functions.

475

Defense Media Activity 0 0

Defense Micro-Electronics Activity Did not report 0

Defense Security Cooperation Agency 0 0

Defense Security Service 0 164

Defense Threat Reduction Agency The agency did not identify the number of FTEs, 

but noted that several contracts contained these 

functions.

261

Department of Defense Education 

Activity

0 0

Joint Chiefs of Staff 0 0

Missile Defense Agency 0 89

Office of the Secretary of Defense

Washington Headquarters Service

Pentagon Force Protection Agencyb

The components did not identify the number of 

FTEs, but reported that 24 out of 950 contracts 

consolidated from the three components had 

contractors performing these functions.

1

Test Resource Management Center 0 0

Tricare Management Activity The activity did not identify the number of FTEs, 

but stated that some contracts contained these 

functions

2

United States Africa Command 0 0

Appendix II: Comparison of Components’ Identification 

of Contractors Providing Services Closely Associated 

With Inherently Governmental Functions in their Fiscal 

Year 2011 and 2012 Certification Letters
Appendix II: Comparison of Components’ 

Identification of Contractors Providing 

Services Closely Associated With Inherently 

Governmental Functions in their Fiscal Year 

2011 and 2012 Certification Letters

Page 39 GAO-15-88 Defense Contractors

Component 2011 2012

United States Central Command Did not report 25

United States European Command 0 0

United States Forces Korea Did not report 0

United States Northern Command The commands did not identify the number of 

FTEs, but noted that “some requirements”

contained these functions.

171

United States Special Operations 

Command 

0 106

United States Strategic Command Did not report 0

United States Southern Command 0 Did not report

United States Transportation Command 0 0

Source: GAO-13-391 and GAO analysis of DOD Certification Letters for fiscal years 2011 and 2012 | GAO-15-88.

a As of September 2014, the Air Force has yet to provide a certification letter for the fiscal year 2012 

inventory identifying contractor FTEs in either category. Further, the fiscal year 2011 data from the Air 

Force were based on preliminary estimates, and the Air Force did not provided a final certification 

letter for fiscal year 2011.

b The Office of the Secretary of Defense, Director of Administration and Management submitted a 

consolidated review on behalf of the Office of the Secretary of Defense, Washington Headquarters 

Service, and the Pentagon Force Protection Agency, but did not specifically identify which 

components reported contractors performing closely associated with inherently governmental 

functions. In addition, officials responsible for the consolidated review identified an error in the 

certification letter and updated it to reflect 14.7 contractor FTEs performing closely associated with 

inherently governmental functions.
Appendix III: Comments from the Department 

of Defense

Page 40 GAO-15-88 Defense Contractors

Appendix III: Comments from the 

Department of Defense
Appendix III: Comments from the Department 

of Defense

Page 41 GAO-15-88 Defense Contractors
Appendix IV: GAO Contact and Staff 

Acknowledgments

Page 42 GAO-15-88 Defense Contractors

Timothy J. DiNapoli, (202)512-4841 or dinapolit@gao.gov

In addition to the contact named above Penny Berrier, Assistant Director; 

MacKenzie Cooper; Kate Eberle; Kristine Hassinger; John Krump; Caryn 

E. Kuebler; Jean McSween; Oziel Trevino; and Candice Wright made key 

contributions to this report.

Appendix IV: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(100033)
The Government Accountability Office, the audit, evaluation, and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and 

policies; and provides analyses, recommendations, and other assistance 

to help Congress make informed oversight, policy, and funding decisions. 

GAO’s commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no 

cost is through GAO’s website (http://www.gao.gov). Each weekday 

afternoon, GAO posts on its website newly released reports, testimony, 

and correspondence. To have GAO e-mail you a list of newly posted 

products, go to http://www.gao.gov and select “E-mail Updates.”

The price of each GAO publication reflects GAO’s actual cost of 

production and distribution and depends on the number of pages in the 

publication and whether the publication is printed in color or black and 

white. Pricing and ordering information is posted on GAO’s website, 

http://www.gao.gov/ordering.htm.

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537.

Orders may be paid for using American Express, Discover Card, 

MasterCard, Visa, check, or money order. Call for additional information.

Connect with GAO on Facebook, Flickr, Twitter, and YouTube.

Subscribe to our RSS Feeds or E-mail Updates. Listen to our Podcasts.

Visit GAO on the web at www.gao.gov.

Contact:

Website: http://www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-

4400, U.S. Government Accountability Office, 441 G Street NW, Room 

7125, Washington, DC 20548

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548

GAO’s Mission

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Phone

Connect with GAO

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Congressional 

Relations

Public Affairs

Please Print on Recycled Paper.