United States Government Accountability Office

GAO Report to the Subcommittee on 

Readiness and Management Support, 

Committee on Armed Services, 

U.S. Senate 

DEFENSE 

ACQUISITIONS 

Tailored Approach 

Needed to Improve 

Service Acquisition 

Outcomes 

November 2006 

 

GAO-07-20 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

November 2006

DEFENSE ACQUISITIONS 

Tailored Approach Needed to Improve 

Highlights of GAO-07-20, a report to the Service Acquisition Outcomes 

Subcommittee on Readiness and

Management Support, Committee on 

Armed Services, U.S. Senate 

Department of Defense (DOD) 

obligations for service contracts 

rose from $82.3 billion in fiscal year 

1996 to $141.2 billion in fiscal year 

2005. DOD is becoming

increasingly more reliant on the

private sector to provide a wide 

range of services, including those

for critical information technology 

and mission support. DOD must 

maximize its return on investment 

and provide the warfighter with 

needed capabilities and support at 

the best value for the taxpayer. 

GAO examined DOD’s approach to 

managing services in order to

(1) identify the key factors DOD 

should emphasize to improve its 

management of services and 

(2) assess the extent to which 

DOD’s current approach exhibited 

these factors.

What GAO Recommends

GAO recommends that DOD take a

proactive approach to managing

strategic and transactional level 

service acquisition elements. This

includes establishing a normative

position of service spending, 

determining risk areas for greater 

attention, and communicating 

these in a manner where individual

transactions can then be made to

support strategic goals and meet 

cost and performance objectives.

DOD concurred with all of our 

recommendations and noted 

several actions the department is 

taking or plans to take to improve 

the acquisition of services.

Several key factors are necessary to improve DOD’s service acquisition 

outcomes—that is, obtaining the right service, at the right price, in the right 

manner. These factors can be found at both the strategic and the 

transactional levels and should be used together as a comprehensive, but 

tailored approach to managing service acquisition outcomes. At the strategic 

level, key success factors include (1) strong leadership that defines a 

corporate vision and normative goals; (2) sustained, results-oriented 

communication and metrics; (3) defined responsibilities and associated 

support structures; and (4) increased knowledge and focus on spending and 

data trends. The strategic level also sets the context for the transactional 

level, where the focus is on making sound decisions on individual 

transactions. Success factors at this level include having (1) valid and welldefined requirements; (2) properly structured business arrangements; and 

(3) proactively managed outcomes. 

DOD’s current approach to managing service acquisition has tended to be 

reactive and has not fully addressed the key factors for success at either the

strategic or transactional level. At the strategic level, DOD has yet to set the 

direction or vision for what it needs, determine how to go about meeting 

those needs, capture the knowledge to enable more informed decisions, or 

assess the resources it has to ensure departmentwide goals and objectives 

are achieved. For example, despite implementing a review structure aimed 

at increasing insight into service transactions, DOD is not able to determine 

which or how many transactions have actually been reviewed. The military

departments, while having some increased visibility, have only reviewed 

proposed acquisitions accounting for less than 3 percent of dollars obligated

for services in fiscal year 2005 and are in a poor position to regularly identify 

opportunities to leverage buying power or otherwise change existing 

practices. Actions at the transactional level continue to focus primarily on 

awarding contracts and do not always ensure that user needs are translated 

into well-defined requirements or that post-contract award activities result in 

expected performance. 

Key Strategic and Transactional Factors for Service Acquisition 

Effective service acquisition requires the leadership, processes, and information necessary 

for mitigating risks, leveraging buying power, and managing outcomes

Strategic level

Individual service transactions must focus on buying the right thing, the right way, while getting 

the desired outcomes

Transactional level

Source: GAO (analysis).

www.gao.gov/cgi-bin/getrpt?GAO-07-20.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Paul Francis at 

(202) 512-4841 or francisp@gao.gov. 
Contents 

Letter 1

Results in Brief 3 

Background 4

Managing Service Acquisition Requires Both a Strategic and a 

Transactional Focus 8 

DOD Service Acquisition Approach Does Not Fully Address Key 

Elements at the Strategic or Transactional Levels 20 

Conclusions 33

Recommendations for Executive Action 34 

Agency Comments and Our Evaluation 35 

Appendix I Scope and Methodology 38 

Appendix II Comments from the Department of Defense 41 

Appendix III GAO Contact and Staff Acknowledgements 48 

Tables 

Table 1: Changes in DOD’s Use of Service Contract Obligations, 

Fiscal Years 1996 to 2005 5 

Table 2: Service Acquisitions Reviewed under DOD and Military 

Department Review Structure 24 

Figures 

Figure 1: Key Strategic and Transactional Factors for Service 

Acquisition 9

Figure 2: Key Factors in Achieving a Strategic Approach to Service 

Acquisition 10

Figure 3: Key Factors for Managing Service Acquisitions at a 

Transactional Level 15 

Page i GAO-07-20 DOD Service Acquisitions
Abbreviations 

DAU Defense Acquisition University 

DOD Department of Defense 

NETC Naval Education and Training Command 

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

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Page ii GAO-07-20 DOD Service Acquisitions
United States Government Accountability Office

Washington, DC 20548 

November 9, 2006 

The Honorable John Ensign 

Chairman 

The Honorable Daniel K. Akaka 

Ranking Minority Member 

Subcommittee on Readiness and Management Support 

Committee on Armed Services 

United States Senate 

In fiscal year 2005, the Department of Defense (DOD) obligated more than 

$141 billion on service contracts, a 72-percent increase since fiscal year 

1996. DOD is increasingly relying on the private sector to provide a wide 

range of services, including consulting and administrative support, 

information technology services, and weapon system and base operations 

support. As the largest buyer of services in the federal government, and 

operating in an environment in which the nation’s large and growing 

structural deficit will require difficult resource decisions, DOD must 

maximize its return on investment and provide the warfighter with needed

capabilities at the best value for the taxpayer. 

Our work and that of others has highlighted examples of long-standing 

concerns in planning, executing, and overseeing service acquisition. For 

example, GAO has identified DOD contract management to be at high risk 

of vulnerabilities to fraud, waste, abuse, and mismanagement for more 

than a decade. In our 2005 high-risk report update, we noted that with 

regard to service acquisition, DOD had not yet fully implemented a 

strategic approach to buying services; did not have a comprehensive plan

to ensure it had the right skills and capabilities in its acquisition 

workforce; and did not always make sound use of the tools, such as 

performance-based service contracting, to acquire the services it needed.1

To ensure that DOD acquires services by means that are in the best 

interest of the government and managed in compliance with applicable 

statutory requirements, sections 801 and 802 of the National Defense 

Authorization Act for Fiscal Year 2002 required DOD to establish a service

acquisition management approach, including developing a structure for 

 1

GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: January 2005). 

Page 1 GAO-07-20 DOD Service Acquisitions
reviewing individual service transactions based on dollar thresholds and 

other criteria.2

 Further, in January 2006, additional requirements were 

established pertaining to DOD’s service contracting management structure 

and oversight processes.3

 This report assesses DOD’s overall approach to 

managing service acquisition. Specifically, we (1) identified the key factors 

necessary for DOD to emphasize to improve its management of services 

and (2) assessed the extent to which DOD’s approach, including its current 

management structure, exhibited these factors. 

To perform our review, we made extensive use of our prior work in this 

and other related areas, including our January 2002 report that identified 

how leading commercial companies took a strategic approach to acquiring 

services.4

 For the transactional level, we used our prior work and that of 

others on issues related to individual service contract transactions and 

held detailed discussions with relevant contracting experts to confirm and 

validate key factors. In total, the results of these efforts proffer a model to 

improve results in service acquisition management. To assess the extent to

which DOD’s current approach exhibited these characteristics, we 

collected and reviewed relevant DOD guidance and policies, including 

those that established its current management structure and review 

processes. We interviewed officials responsible for implementing the 

management structure in the Office of the Secretary of Defense, as well as

each of the cognizant offices within the military departments. We also 

obtained information on the types of activities and reviews conducted by 

these offices. We visited 20 commands and buying activities to understand 

the processes by which these organizations acquire services. We reviewed

various contract files and process documentation for selected service 

acquisitions and discussed challenges faced in acquiring services and 

efforts to improve service acquisition with policy and contracting 

personnel at each of these locations. See appendix I for additional details 

on scope and methodology. We conducted our review from August 2005 to

September 2006 in accordance with generally accepted government 

auditing standards. 

 2

Pub. L. No. 107-107, § 801–802, (2001). Sec. 801 added new sections 2330 and 2330a to title 

10, U.S. Code. 

3

Pub. L. No. 109-163, § 812, (2006). Sec. 812 amended 10 U.S.C. § 2330. 

4

GAO, Best Practices: Taking A Strategic Approach Could Improve DOD’s Acquisition of 

Services, GAO-02-230 (Washington, D.C.: Jan. 18, 2002). 

Page 2 GAO-07-20 DOD Service Acquisitions
Achieving good service acquisition outcomes—that is, obtaining the right 

service, at the right price, in the right manner—requires management 

attention at both a strategic and a transactional level. The strategic level 

requires the leadership, processes, and information necessary for 

mitigating risks, leveraging buying power, and managing outcomes across 

the enterprise. At this level, we identified four key factors for improving 

outcomes: strong corporate leadership and vision, results-oriented goals 

and metrics, defined responsibilities and support structures, and improved 

knowledge of spending. The strategic level also sets the context for the 

transactional level, where individual service acquisitions are executed.

Key factors for good outcomes at the transactional level include clearly 

defined requirements, sound business arrangements, and appropriate 

contract management and oversight processes. At both levels, risks exist 

that can impair an organization’s ability to get desired service acquisition 

outcomes. A comprehensive management approach tailors the strategic 

and transactional factors to address these risks. For example, by knowing 

where its service acquisitions are and setting a course for where they 

ought to be, an organization provides the context for making decisions on 

individual transactions. 

Results in Brief 

DOD’s current approach to managing service acquisition has tended to be 

reactive and has not fully addressed the key factors for success at either 

the strategic or the transactional level. At the strategic level, DOD has not 

developed a normative position for gauging whether ongoing and planned

efforts can best achieve intended results. Further, good information on the 

volume and composition of service acquisitions is still wanting, 

perpetuating the circumstance in which the acquisition of services tends to

happen to DOD, rather than being proactively managed. For example, 

despite implementing a review structure aimed at increasing insight into 

service transactions, DOD is not able to determine which or how many 

transactions have been reviewed. The military departments have only 

slightly better visibility, having reviewed proposed acquisitions accounting 

for less than 3 percent of dollars obligated for services in fiscal year 2005.

At the transactional level, DOD tends to focus primarily on those elements

associated with awarding contracts, with much less attention paid to 

formulation of service acquisition requirements and to assessment of the 

actual delivery of contracted services. Moreover, the results of individual

acquisitions are generally not used to inform or adjust strategic direction.

As a result, DOD is not in a position to determine whether investments in 

services are achieving their desired outcomes. 

To put DOD in a position to proactively manage service acquisition 

outcomes, we are making six recommendations to assist DOD in 

Page 3 GAO-07-20 DOD Service Acquisitions
identifying specific solutions at the strategic and transactional levels. In 

written comments on a draft of this report, DOD concurred with our 

recommendations and agreed that a more coordinated, integrated, and 

strategic approach for acquiring services is needed. DOD noted that it is 

developing an integrated assessment of how best to acquire services and 

expects this assessment will result in a comprehensive, departmentwide 

architecture. DOD expects its assessment will be completed in early 2007. 

Our discussions with DOD officials indicate that this architecture may 

hold the potential for making fundamental changes at the strategic and 

transactional levels. The extent to which DOD successfully integrates the 

key factors we identified as it develops and implements its architecture 

will be essential to fostering the appropriate attention and action needed 

to make service acquisitions a managed outcome. The full text of DOD’s 

comments may be found in appendix II. 

Over the past decade, DOD has increasingly relied on private sector 

contractors to provide a range of services, including management and 

information technology support. For example, DOD’s obligations on 

service contracts rose from $82.3 billion in fiscal year 1996 to $141.2 billion 

in fiscal year 2005 (see table 1). DOD committed 20 percent of its total 

service obligations in fiscal year 2005 for professional, administrative, and

management support contracts. Overall, according to DOD, the amount 

obligated on service contracts exceeded the amount the department spent 

on supplies and equipment, including major weapon systems. 

Background 

Page 4 GAO-07-20 DOD Service Acquisitions
Table 1: Changes in DOD’s Use of Service Contract Obligations, Fiscal Years 1996 to 2005 (fiscal year 2005 dollars in billions)

Service obligations 

Fiscal year 

Service category 1996 2005

Percentage

of service 

obligations,

fiscal year 

2005

Percentage

change, fiscal 

years 1996 

to 2005

Professional, administrative, and management support $10.8 $28.3 20.0 161

Construction of facilities 7.3 11.7 8.3 62

Maintenance and repair of equipment 6.6 11.4 8.1 74

Information technology 4.9 10.3 7.3 110

Medical services 1.6 8.0 5.6 412

Housekeeping services 2.4 4.8 3.4 98

Transportation, travel, and relocation 2.4 6.2 4.4 154

All other services, excluding research and development

a

22.7 23.6 16.7 4

All services excluding research and development $58.6 $104.2 73.8 78

Research and development 23.7 37.0 26.2 56

Total, all service contracts $82.3 $141.2 100.0 72

Source: DOD’s DD350 database for all actions exceeding $25,000 (data); GAO (analysis).

a

Other services include photographic, mapping, and printing; education and training; and social 

services, among others. 

The growth in service acquisition spending results, in part, from recent 

trends and changes within DOD’s acquisition environment, including the 

increased use of contracted services. For example, while spending on 

services has increased, DOD’s civilian workforce shrank by about 

38 percent between fiscal years 1989 and 2002. DOD performed this 

downsizing without proactively shaping the civilian workforce to ensure 

that it had the specific skills and competencies needed to accomplish 

future DOD missions. In June 2006, DOD issued a human capital strategy 

that acknowledged that DOD’s civilian workforce is not balanced by age or 

experience. DOD further noted that a proposed reduction of an additional 

55,000 personnel through fiscal year 2007, continuing increases in the 

number of retirement age employees, and the loss of experienced 

personnel and institutional knowledge could make it difficult to mentor its 

developing workforce. DOD’s strategy identified a number of steps 

planned over the next 2 years to more fully develop a long-term approach 

to managing its acquisition workforce. 

The increased use of service contracts is also partly attributable to DOD 

acquiring capabilities through different acquisition approaches, as well as 

needing to meet new requirements and demands. For example, DOD 

Page 5 GAO-07-20 DOD Service Acquisitions
historically bought space launch vehicles, such as the Delta and Titan 

rockets as products. Now, under the Evolved Expendable Launch Vehicle 

program, the Air Force purchases launch services using contractor-owned 

launch vehicles. Similarly, after the terrorist attacks on September 11, 

2001, increased security requirements and the deployment of active duty 

and reserve personnel resulted in DOD having fewer military personnel to 

protect domestic installations. Consequently, the U.S. Army awarded 

contracts worth nearly $733 million to acquire contract guards at 

57 installations. 

DOD has traditionally approached the acquisition of services differently 

than the acquisition of products. DOD and military department officials we 

interviewed noted that DOD generally views service acquisition as less 

risky than the acquisition of weapon systems, in part because many 

services are not tied directly to mission accomplishment and tend to be 

composed of far more numerous and lower dollar value contracts. DOD 

has long focused its attention, policies, and procedures on managing major 

weapon systems and typically does so using the cost of the weapon system 

as a proxy for risk. For example, DOD classifies its acquisition programs, 

including research and development efforts related to weapon systems 

and major automated information systems, in categories based upon 

estimated dollar value or designation as a special interest.5

 The largest 

programs generally fall under the responsibility of the Under Secretary of 

Defense (Acquisition, Technology, and Logistics), while less complex and 

risky programs are overseen by the service or component acquisition 

executive. Overall, more than 25 percent of DOD’s annual budget is 

managed under this framework. For example, as of December 2005, DOD 

managed 85 major defense acquisition programs currently estimated to 

cost about $1.6 trillion combined over their program life. 

Conversely, we previously reported that DOD’s approach to buying 

services is largely fragmented and uncoordinated, as responsibility for 

acquiring services is spread among individual military commands, weapon

system program offices, or functional units on military bases, with little 

visibility or control at the DOD or military department level.6

 For example, 

we noted that 

 5

The policies and practices for these types of acquisitions are reflected in DOD Directive 

5000.1 and Instruction 5000.2.

6

GAO-02-230. 

Page 6 GAO-07-20 DOD Service Acquisitions
• DOD’s information systems could provide data on the amount spent on 

services, but the reliability of the information was questionable and the 

system itself was seldom used as a tool to manage or identify 

opportunities for managing DOD’s supplier base.

• Procurement processes within DOD were not always carried out 

efficiently and effectively. 

• There were few service contracting-related enterprisewide annual 

performance metrics, none of which measured the cost-effectiveness 

or quality of services obtained. 

Services differ from products in several aspects and can also be 

challenging when attempting to define requirements, establish measurable 

and performance-based outcomes, and assess contractor performance. 

For example, it can easily take over 10 years to define requirements and 

develop a product like a weapon system before it can actually be delivered

for field use. Individual service acquisitions generally proceed through 

requirements, solution, and delivery more rapidly. Further, delivery of 

services generally begins immediately or very shortly after the contract is

finalized. 

In response to the National Defense Authorization Act for Fiscal Year 

2002, DOD and the military departments established a service acquisition 

management structure, including processes at the headquarters level for 

reviewing individual, high-dollar acquisitions. In September 2003, we 

reported that this approach did not provide a departmentwide assessment 

of how spending for services could be more effective and recommended 

that DOD give greater attention to promoting a strategic orientation by 

setting performance goals for improvements and ensuring accountability 

for achieving those results.7

 In its response, DOD concurred in principle 

and agreed that additional actions could strengthen the management 

structure as implemented, but also identified challenges for doing so based 

on organizational size, complexity, and acquisition environment. 

In January 2006, Congress again enacted legislation with specific 

requirements for managing the acquisition of services.8

 Among other 

things, the legislation required DOD to 

 7

GAO, Contract Management: High-Level Attention Needed to Transform DOD Services 

Acquisition, GAO-03-935 (Washington, D.C.: Sept. 10, 2003).

8

Pub. L. No. 109-163, § 812.

Page 7 GAO-07-20 DOD Service Acquisitions
• identify the critical skills and competencies needed to carry out the 

procurement of services;

• develop a comprehensive strategy for recruitment, training, and 

deploying employees to meet the requirements for skills and 

competencies; 

• establish contract services acquisition categories, based on dollar 

thresholds, for the purpose of establishing the level of review, decision 

authority, and applicable procedures; 

• dedicate full-time commodity managers to coordinate the procurement 

of key categories of services; 

• ensure that contract services are procured by means of procurement 

actions that are in the best interests of DOD and entered into and 

managed in compliance with applicable laws, regulations, directives, 

and requirements; 

• ensure that competitive procedures and performance-based 

contracting are used to the maximum extent practicable; and

• monitor data and periodically collect spend analyses to ensure that 

funds allotted for the procurement of services are expended in the 

most rational and economical manner practicable. 

The requirements pertaining to establishing contract service acquisition 

categories were to be phased in over a period of 3 years, with the first 

categories, for acquisitions with an estimated value of $250 million or 

more, to be established by October 2006. At the conclusion of our review, 

DOD issued a policy memorandum aimed at strengthening service 

acquisition management in response to the legislation. DOD is to report on 

its implementation by January 2007.

Several key factors are necessary to improve DOD’s service acquisition 

outcomes—that is, obtaining the right service, at the right price, in the 

right manner. Our work found that to do this, an organization must 

understand the volume, sources, portfolios, and trends related to what it is 

buying, then ensure that requirements are valid and understood, services 

are purchased properly, and performance delivered with minimum risk 

and maximum efficiency. Success factors to achieve these goals can be 

defined at both the strategic and the transactional level, as shown in 

figure 1. 

Managing Service 

Acquisition Requires 

Both a Strategic and a 

Transactional Focus 

Page 8 GAO-07-20 DOD Service Acquisitions
Figure 1: Key Strategic and Transactional Factors for Service Acquisition

Effective service acquisition requires the leadership, processes, and information necessary 

for mitigating risks, leveraging buying power, and managing outcomes

Strategic level

Individual service transactions must focus on buying the right thing, the right way, while 

getting the desired outcomes

Transactional level

Source: GAO (analysis).

The strategic level is where the enterprise sets the direction or vision for 

what it needs, captures the knowledge to enable more informed 

management decisions, ensures deparmentwide goals and objectives are 

achieved, determines how to go about meeting those needs, and assesses 

the resources it has to achieve desired outcomes. The strategic level also 

sets the context for the transactional level, where the focus is on making 

sound decisions on individual transactions. Our work found that officials

need to ensure that individual service transactions have valid and welldefined requirements, have appropriate business arrangements, and that 

performance is being managed—again, while minimizing related risks and 

maximizing efficiency. A comprehensive approach would use the strategic 

and transactional factors in a complementary manner to tailor 

management activity to ensure preferred outcomes. Without this 

management attention, risks exist within each level that can impair an 

organization’s ability to get desired service acquisition outcomes. 

Strategic Focus: Knowing 

Where Service Acquisition 

Is Today and Where It 

Should Be Tomorrow 

Our prior work with leading commercial firms found that a successful 

organization proactively identifies and manages outcomes of the services 

it acquires at a strategic, or enterprisewide, level. Effective service 

acquisition requires the leadership, processes, and information necessary 

for mitigating risks, leveraging buying power, and managing outcomes. 

Several factors are needed to implement a strategic approach, including

(1) strong leadership to define and articulate a corporate vision, including

specific goals and outcomes; (2) results-oriented communication and 

metrics; (3) defined responsibilities and associated support structures; and 

(4) increased knowledge and focus on spending data and trends. See 

figure 2 for key factors to achieve a strategic approach to acquiring 

services. 

Page 9 GAO-07-20 DOD Service Acquisitions
Figure 2: Key Factors in Achieving a Strategic Approach to Service Acquisition

Effective service acquisition requires the leadership, processes, and information necessary 

for mitigating risks, leveraging buying power, and managing outcomes

Establish and commit 

to strategic approach

Enable success

through sustained 

communication and 

metrics

Create supporting

structures, processes

and roles

Obtain good 

knowledge on service 

spending

Strategic level

Source: GAO (analysis).

Our work found that organizations seeking to significantly improve service 

acquisition outcomes must begin with an established vision and 

commitment from senior management. This can come in various ways, 

ranging from restructuring the corporate procurement function, providing 

greater insight into and authority over the company’s service spending, or

signaling support for a new way of doing business. With an articulated 

vision, leaders then have a basis for making commitments to factors 

important for realizing the desired end state, such as practices, 

procedures, structures, information, and human capital planning. Our 

work has shown that when corporate goals and expected outcomes are 

not defined, employees becomes less likely to accept new roles or 

understand the importance of upcoming changes that are necessary to 

reduce risks in service acquisition. These include allowing the sum total of 

individual transactions to define the strategy and not providing a context

within which managers of individual transactions can make sound 

judgments about the risk and sensitivity of a particular service acquisition. 

Leadership Must Establish 

Vision and Goals 

Being able to define a strategic vision presupposes that leaders can 

determine and articulate a normative position for the future. A normative 

position would entail defining what end state or goals they want to achieve 

at a specified time. This position can then be translated into specifics, both 

in the aggregate and by type, such as

• the current volume, type, location, and trends of service acquisitions; 

• the results the organization wants to achieve in a specified time frame; 

• the definition of a good service acquisition outcome; and 

• the characteristics of a service acquisition that make it desirable, 

undesirable, or sensitive.

Page 10 GAO-07-20 DOD Service Acquisitions
Critical to establishing a normative position is knowledge of current 

service acquisition expenditures, management priorities, and expected

outcomes. The vision could also dictate which services represent risks to 

the organization. For example, acquisitions could be deemed low risk 

based on minimal cost exposure, high availability of service providers, or 

limited criticality for meeting mission requirements. Conversely, high-risk 

acquisitions may be those of higher dollar value, mission-critical 

requirements, services that are new or being acquired using a different 

approach, or any other services determined to need additional corporatelevel involvement or oversight based on management priorities. 

Once a vision and desired end state for service acquisition have been 

defined, senior management must be both active and persistent in 

supporting ongoing efforts, adjusting the strategy to reflect new 

information, and moving toward the established normative position. 

Communication and metrics are important management ingredients in 

terms of overcoming resistance, cultural barriers, and other impediments 

to achieving identified goals. Senior leaders also have the responsibility to 

communicate and demonstrate a commitment to sound practices deemed 

acceptable for the acquisition function. We have previously reported that

DOD faces vulnerabilities in aspects of its senior leadership because of 

certain disconnects, including senior positions that have remained unfilled 

for long periods of time, the acquisition culture fostered by management’s 

tone at the top, and the management approach used in new industry 

partnering relationships.9

Vision and Goals Must Be 

Communicated and Used to 

Measure Progress 

We have also noted the importance of leadership by senior agency officials 

to successfully transform other aspects of DOD’s business operations and 

those of other federal agencies. For example, our prior work has shown 

that DOD’s substantial financial and business management weaknesses 

adversely affect not only its ability to produce auditable financial 

information, but also its ability to provide accurate, complete, and timely

information for DOD management and Congress to use in making 

informed decisions. We indicated that overcoming these weaknesses 

 9

GAO, Contract Management: DOD Vulnerabilities to Contracting Fraud, Waste, and 

Abuse, GAO-06-838R (Washington, D.C.: July 7, 2006).

Page 11 GAO-07-20 DOD Service Acquisitions
required sustained leadership at the highest level and a strategic and

integrated plan.10

Metrics defining specified outcomes are vital to increasing the likelihood

that changes to practices will successfully contribute to the organizational 

vision. While they can differ in nature and be used to varying degrees, 

metrics can be used to (1) evaluate and understand performance levels, 

(2) identify critical processes that require attention, (3) document results 

over time, and (4) report information to senior officials for decisionmaking purposes. To illustrate this, DOD spends 20 percent of its service 

dollars on professional and administrative management support contracts. 

If senior DOD officials believe that such volume poses risks, then it can 

use this information to establish targets to control and monitor the use of 

these services. For example, in March 2006 the Secretary of the Air Force 

issued a memorandum directing increased visibility and management of 

contract services in support of command functions, in an attempt to save 

over $6 billion that would then be used for other transformation initiatives. 

If the Air Force follows up by collecting timely data on the individual 

service transactions made in this area, it can see whether it is making 

progress toward its desired end state. For DOD, risks of not doing this at a 

strategic level entail losing momentum and failing to sustain positive 

change, and such failures can then be manifested in quick fixes, fire drills, 

or changes in policy statements that do not have a material effect on 

actual operations. 

Successful service acquisition management also requires attention to the 

organization’s ability to move from a fragmented manner of doing business 

to one that is more coordinated and strategically oriented. Primarily, this 

involves changing how services are acquired in terms of business 

processes, organizational structures, and roles and responsibilities. Our 

work with leading commercial firms found that typical changes in this area 

include 

Structures and Processes Must 

Be Defined to Facilitate Service 

Management Direction 

• restructuring acquisition organizations and elevating the procurement 

function to improve coordination with other internal organizations and 

optimize available resources; 

 10GAO, DOD Business Transformation: Sustained Leadership Needed to Address Longstanding Financial and Business Management Problems, GAO-05-723T (Washington,

D.C.: June 8, 2005). 

Page 12 GAO-07-20 DOD Service Acquisitions
• establishing new processes for routine tasks and using cross-functional 

teams made up of individuals with various skills to ensure the right mix 

of knowledge, technical expertise, and credibility; and 

• establishing full-time, dedicated commodity managers to provide more 

effective management over key services. 

We reported in March 2005 that the Department of Homeland Security was 

pursuing similar approaches as it attempted to integrate the various 

acquisition functions it inherited upon its establishment in 2003. For 

example, the department designated a Chief Procurement Officer with 

broad responsibility for its acquisition function and established 

commodity councils composed of representatives from across the 

department that were assigned responsibility for assessing future 

purchasing strategies. We noted, however, that senior agency leadership 

needed to address a number of challenges before fully integrating its 

procurement function, such as clearly defining the roles and 

responsibilities of key offices, and establishing a structure to ensure 

continued support for commodity councils—such as appointing full-time 

commodity managers.11

In essence, this move toward a more strategic orientation can be 

compared to a franchise model of business versus that of individually 

owned stores or units. While franchises, like individually owned 

businesses, operate at the local level and adapt to the specific needs and 

demands of a community, they still must adhere to the consistent set of 

standards and processes of the parent organization. For service 

acquisition, this translates into recognition that while unique local 

requirements need to be understood and met, individual acquisitions 

should also be viewed in the context of organizational goals, objectives, 

and strategies. In this regard, company officials indicated they can tailor 

delivery of services to meet local needs while helping to achieve 

organizational cost savings or quality improvement objectives. Risks here 

are twofold. First, if a single, monolithic process is used for every service 

acquisition regardless of size, sensitivity, or type, it could be overkill for 

some transactions and insufficient for others. Second, allowing local

buying activities to operate independent of organizational standards and

 11GAO, Homeland Security: Successes and Challenges in DHS’s Efforts to Create an

Effective Acquisition Organization, GAO-05-179 (Washington, D.C.: Mar. 29, 2005). 

Page 13 GAO-07-20 DOD Service Acquisitions
processes would impair or defeat an organization’s ability to achieve 

desired aggregate goals or outcomes. 

Organizations also need basic, reliable data on how service dollars are 

being spent and the capabilities of the workforce in place to acquire and 

manage those services. Company officials who were successful with 

improving service acquisition management informed us it was critical to

define the relevant types of information that were required and then 

develop the appropriate data systems to collect and provide reliable 

spending data. Such data enable senior managers to know not only the 

current state of service acquisition, but how far it is from the desired end 

state. While the type of information may vary depending on the 

organization and the types of services acquired, basic spend analysis data 

should include information and trends related to 

Knowledge on Spending and 

Workforce Vital to Managing 

Services 

• the type of services being acquired; 

• the number of suppliers for a specific service the organization is using; 

• the amount the organization is spending for that service, in total and 

with each supplier; and 

• the units in the organization that are acquiring the services. 

We have previously reported that several civilian agencies have used this 

approach to leverage their buying power, reduce costs, and better manage

suppliers of goods and services. For example, we reported in September 

2004 that the Departments of Agriculture and Veterans Affairs, among 

others, had launched or expanded spend analysis efforts and in turn 

realized savings ranging from $1.8 million to $394 million on related 

acquisitions.12 Similarly, we noted in 2005 that the Department of 

Homeland Security identified 15 commodity areas as having the potential

to leverage the department’s buying power. In fiscal year 2004, four 

commodity councils reported approximately $14.1 million in cost savings 

and avoidances.13 Some councils encountered difficulties due to a shortage 

of comprehensive data upon which to draw an accurate and detailed 

picture of what was being spent on certain commodities over time, thereby 

 12GAO, Best Practices: Using Spend Analysis to Help Agencies Take a More Strategic 

Approach to Procurement, GAO-04-870 (Washington, D.C.: Sept. 16, 2004). 

13GAO-05-179. 

Page 14 GAO-07-20 DOD Service Acquisitions
preventing them from taking full advantage of their strategic sourcing and 

spend analysis efforts. 

Equally important and necessary is for an organization to have a 

workforce that is manned at the appropriate levels and equipped with the 

right skills and abilities. To do this, a comprehensive, data-driven 

workforce analysis must be performed in conjunction with establishing 

the corporate vision and goals. An organization cannot fully understand 

what skills and staffing commitments are necessary at each organizational 

level to meet service acquisition requirements until it understands where it 

wants to go and how it plans to get there. Once information on spending 

and workforce capabilities is known and understood, organizations can be 

more strategic in planning and managing service acquisition. The absence 

of such data creates several risks, including not knowing how and where 

money is being spent on service acquisition or not having the appropriate 

workforce skills or staffing levels to ensure it is using sound buying 

practices. 

Transactional Focus: 

Buying the Right Individual 

Service the Right Way 

While the strategic level defines the direction and manner in which an 

organization pursues improvements in service acquisition, it is through 

individual service transactions that the strategy is implemented. Key 

factors at this transactional level include (1) clearly defined and valid 

requirements; (2) appropriate business arrangements; and (3) effective 

contractor management and oversight. In short, an organization needs to

assure itself that on individual service transactions it is buying the right 

thing in the right way and that doing so results in the desired outcome. See 

figure 3 for key factors for effectively managing service acquisitions at the 

transaction level. 

Figure 3: Key Factors for Managing Service Acquisitions at a Transactional Level 

Individual service acquisitions must focus on buying the right thing, the right way, while 

getting the desired outcomes

Establish valid needs

and requirements

Structure an appropriate

business arrangement

Manage and assess

contractor performance

Transactional level

Source: GAO (analysis).

Page 15 GAO-07-20 DOD Service Acquisitions
Establishing a valid need and translating that into a service acquisition 

requirement is essential for obtaining the right outcome. Without this, an

organization increases the risk that it will pay too much for the services 

provided, acquire services that do not meet its needs, or enter too quickly 

into a sensitive arrangement that exposes the organization to financial,

performance, or other risks. Moreover, to establish accurate requirements, 

the customer organization would benefit by involving stakeholders that 

have knowledge about past transactions, current market capabilities and 

the potential supplier base, and budgetary and financial management 

issues. The makeup of stakeholders may vary across different transactions

depending on the nature, complexity, and risks. In the end, the purpose of

stakeholders with varied knowledge and skills is to ensure at the earliest

point possible that all aspects of the acquisition are necessary, executable,

and tailored to the level of risk commensurate with the individual 

transaction. We have found that when DOD uses similar teaming concepts 

to develop and deliver products, the results have included superior 

outcomes within predicted time frames and budgets. For example, we 

reported in April 2001 that the Advanced Amphibious Assault Vehicle 

program used teams to reduce the time needed to make a design decision

from 6 months to about a week.14

Good Outcomes Begin with 

Sound Requirements 

Because the nature of service contracts can vary, they naturally require 

different approaches in describing requirements. For example, the time, 

discipline, and sophistication of a team developing a requirement for 

repetitive building maintenance would be considerably less than that of a 

team developing a requirement for the first purchase of a space launch

service. Observing these factors, tailored to the individual requirement at 

hand, can help to ensure that risks associated with a requirement for a 

service acquisition are fully considered before entering into a business 

arrangement. This is especially important for service acquisitions, because

once requirements are developed, most transactions move very quickly

into the business arrangement and contracting stages. 

Once a requirement has been validated and defined, it becomes necessary

to develop an appropriate business arrangement to meet that need while 

protecting the government’s interests. Of course, without a sound 

requirement, the business arrangement could be relegated to buying the

wrong service the right way. At a basic level, this includes defining a clear 

Appropriate Business 

Arrangements Provide Right 

Way to Buy Services 

 14GAO, Best Practices: DOD Teaming Practices Not Achieving Potential Results, 

GAO-01-510 (Washington, D.C.: Apr. 10, 2001). 

Page 16 GAO-07-20 DOD Service Acquisitions
scope of expected contractor performance, developing an objective means 

to assess the contractor’s performance, ensuring effective contractor 

selection based on competition and sound pricing, and selecting an 

appropriate contracting vehicle. Here again, while these are performed 

with respect to the individual transaction, they must be done in the 

context of the organization’s strategic vision. 

As an organization undergoes the process for selecting those contractors 

that will provide services, there should be clearly established relationships 

among what tasks the contractor is expected to perform, the contract 

terms and conditions, and performance evaluation factors and incentives. 

This is especially true as federal agencies makes adjustments to their 

acquisition practices. For example, in recent years, federal agencies have 

made a major shift in the way they buy services, turning increasingly to 

interagency contracts as a way to streamline the procurement process. In 

these cases, an agency can use an existing contract that has already been 

awarded by another agency, or turn to another agency to issue and 

administer task orders on its behalf, often for a fee.15 Requirements, roles, 

and responsibilities need to be clear to reduce risks. For example, we 

reported in July 2005 that DOD customers did not provide the awarding 

agency with detailed information about their needs.16 Without this 

information, these agencies did not translate DOD’s needs into welldefined contract requirements that contained criteria to determine 

whether the contractor had performed successfully. In the absence of 

well-defined outcomes, DOD and the agencies lacked criteria to provide 

effective contractor oversight. 

Similarly, competition during the acquisition process is also important in 

getting reasonable prices, as offerors put forth their best bid and solution

to meeting the proposed requirements and the government receives the 

benefit of market forces on pricing. We have noted, however, that DOD 

has, at times, sacrificed the benefits of competition for expediency. For 

example, we noted in April 2006 that DOD awarded contracts for security 

guard services supporting 57 domestic bases, 46 of which were done on an 

authorized, sole-source basis. The sole-source contracts supporting the 

 15Task orders are placed against established contracts that provide for the issuance of

orders for the performance of tasks during the period of the contract. 

16GAO, Interagency Contracting: Franchise Funds Provide Convenience, but Value to 

DOD is Not Demonstrated, GAO-05-456 (Washington, D.C.: July 29, 2005). GAO designated 

the management of interagency contracting a high-risk area in January 2005. 

Page 17 GAO-07-20 DOD Service Acquisitions
last 37 installations were awarded by DOD despite recognizing it was 

paying about 25 percent more than previously paid for contracts awarded 

competitively.17

When proper management controls are not in place, particularly in an 

interagency fee-for-service contracting environment, too much emphasis 

can be placed on customer satisfaction and revenue generation rather than 

on compliance with sound contracting policy and required procedures, 

such as competition. Significant problems in the way contracting offices 

carry out responsibilities in issuing the orders for services may not be 

detected or addressed by management. For example, in April 2005 we 

reported that a lack of effective management controls—in particular 

insufficient management oversight and a lack of adequate training—led to

the breakdowns in the issuance and administration of task orders for 

interrogation and other services in Iraq, including: 

• issuing 10 out of 11 task orders that were beyond the scope of 

underlying contracts, in violation of competition rules; 

• not complying with additional DOD competition requirements when 

issuing task orders for services on existing contracts; 

• not properly justifying the decision to use interagency contracting; 

• not complying with ordering procedures meant to ensure best value for 

the government; and 

• inadequate monitoring of contractor performance.18

Without appropriate attention, there is an increased risk that the 

government will pay too much for the purchased service, will be limited in 

its access to new and innovative alternatives, or will not be in the proper

position to effectively manage the contractor after an arrangement is 

established.

At the transactional level it is also important to implement a post-contract 

award process to effectively manage and assess contractor performance to 

ensure that the business arrangement is properly executed. Managing and 

assessing post-award performance entails various activities performed by 

government officials to ensure that the delivery of services meets the 

Actual Performance Must Be 

Managed and Assessed 

 17GAO, Contract Security Guards: Army’s Guard Program Requires Greater Oversight 

and Reassessment of Acquisition Approach, GAO-06-284 (Washington, D.C.: Apr. 3, 2006).

18GAO, Interagency Contracting: Problems with DOD’s and Interior’s Orders to Support 

Military Operations, GAO-05-201 (Washington, D.C.: Apr. 29, 2005). 

Page 18 GAO-07-20 DOD Service Acquisitions
terms of the contract, including adequate surveillance resources, proper 

incentives, and a capable workforce for overseeing contractor activities. 

Each of these requires metrics and tools to encourage contractors to 

provide superior performance and to manage and document that the 

contractor’s performance was acceptable. For example, one important 

element of this phase is having a plan for assessing performance that 

outlines how services will be delivered. In addition, the plan should 

provide a mechanism for capturing and documenting performance 

information so it can serve as past performance information on future 

contracts. Effective use of such a plan can allow the government to 

evaluate the contractor’s success in meeting the specified contract 

requirements. Further, organizations can use monetary incentives, such as

those provided through award and incentive fee contracts, to promote 

desired acquisition outcomes. Finally, quality assurance surveillance—

oversight of the services being performed by the contractor—is important 

to ensure that contractors are providing timely and high-quality services 

and to help mitigate any contractor performance problems. 

In an environment that demands increased interaction between DOD and 

the contractor to ensure expected outcomes, acquisition personnel must 

be adequately trained to understand each of these elements and have the 

skills to manage service contractors accordingly. Without appropriate 

attention through contract completion, we have found that risks exist that 

could result in poor contractor performance, services not being delivered

as expected, or payment to contractors for more than the value of the 

services they performed. For example, our March 2005 review of 

90 contracts showed wide variance in the level of surveillance, including 

15 contracts that had no personnel assigned at all for these 

responsibilities.19 According to DOD officials, this condition existed 

because surveillance was not as important to contracting officials as 

awarding contracts and contracting oversight personnel were not properly 

assigned, evaluated on the performance of their duties, or provided 

enough time to complete surveillance tasks. In the same way that the 

development of requirements for services must be different from the 

development of requirements for products, so is the case for overseeing 

contractor performance. Given that performance thresholds may vary 

greatly, management and oversight of individual service acquisitions may 

need to be tailored to meet specific requirements. In some cases, dollar 

 19GAO, Contract Management: Opportunities to Improve Surveillance on Department of 

Defense Service Contracts, GAO-05-274 (Washington, D.C.: Mar. 17, 2005).

Page 19 GAO-07-20 DOD Service Acquisitions
value may not be a good proxy for determining risk. For example, some 

high dollar contracts could pose relatively little risk to achieving the 

agency’s mission. Conversely, certain lower dollar contracts, such as those

used to obtain interrogation services in Iraq, may pose higher risk and, 

therefore, require greater management attention.

DOD and the military departments have not yet fully addressed the key 

elements for managing service acquisition at a strategic or a transactional

level. At the strategic level, DOD has not formed a normative position of 

where service acquisition needs to be and does not have the data 

necessary to know the state of service acquisition today. As a result, DOD 

is not in a position to determine whether investments in services are 

achieving their desired outcomes. These are precursors to defining and 

promoting improved outcomes. At the transactional level, most of DOD’s 

efforts have been aimed at improving business arrangements, without 

commensurate focus on how requirements are established and 

communicated or how service contracts are executed. Despite the 

implementation of a senior-level review process, buying commands and 

activities have not made significant changes to how they manage 

individual service acquisitions. 

DOD’s overall approach to managing service acquisition suffers from the 

absence of several key elements. DOD has not developed a strategic vision 

and lacks sustained commitment to manage service acquisition risks and 

foster more efficient outcomes. As a result, DOD is not in a position to 

communicate to its workforce how it intends to improve its acquisition of

services; determine needed changes to structures and processes to better 

identify and prioritize risks; or understand the current state of service 

spending and the skills of its current workforce. While DOD’s current 

approach to managing service acquisition at the strategic level provides 

some additional insight into high-dollar value service acquisitions, it lacks

an overall road map for managing risk and integrating key service 

acquisition initiatives. 

DOD has not yet identified the types and quantities of services it 

purchases; the outcomes needed in service acquisition so that necessary 

changes can be understood and evaluated; or metrics that can be used to 

assess whether those changes have actually achieved the expected 

outcomes. DOD and military department officials have acknowledged that 

DOD has not developed a comprehensive plan that targets areas needing 

improvements, coordinates ongoing and planned initiatives, and provides 

an overall road map to improve DOD’s management of services. In the 

DOD Service 

Acquisition Approach 

Does Not Fully 

Address Key 

Elements at the 

Strategic or 

Transactional Levels 

DOD’s Strategic Level 

Approach Missing Key 

Elements 

Normative Position of Service 

Acquisition Not Yet Established 

Page 20 GAO-07-20 DOD Service Acquisitions
absence of such a vision, DOD’s strategic level efforts do not position the 

department to proactively manage service acquisition outcomes, but 

rather relegate DOD to a reactive role in which the billions of dollars spent 

acquiring services simply reflects the sum total of individual actions. 

Further, DOD’s efforts to transform its enterprisewide business operations 

may not translate into improved knowledge on how services are acquired. 

For example, DOD established the Business Transformation Agency in 

October 2005 to lead and coordinate business transformation efforts 

across the department. The Business Transformation Agency is tasked 

primarily with modernizing key information technology systems and 

business processes intended to make reliable data more readily available

while at the same time consolidating the overall number of information 

technology systems and ensure consistency across the department. 

However, the Business Transformation Agency has few ongoing activities 

directly related to the acquisition of services. 

In addition, DOD has pursued few opportunities to leverage its buying 

power to acquire services through the use of strategic sourcing concepts. 

While DOD has undertaken a number of pilot efforts, only a limited 

number of these focused specifically on services. In 2006, DOD appointed 

the Assistant Deputy Under Secretary of Defense for Strategic Sourcing 

and Acquisition Processes to coordinate efforts and assist other DOD 

components, including the military departments and the Defense 

Acquisition University (DAU), as they develop strategic sourcing plans and 

training processes. The Assistant Deputy Under Secretary stated that 

initial efforts were focused on developing a concept of operations to 

facilitate this requirement, but so far had been limited by a lack of staff 

and resources. Further, he acknowledged that his office does not play a 

role in DOD’s service acquisition review process. In September 2006, a 

senior DOD official indicated that DOD was considering transferring this 

responsibility to the Office of the Director, Defense Procurement and 

Acquisition Policy. It is uncertain how this change, if implemented, would 

affect the roles and responsibilities previously assigned to the office. 

Because it lacks a strategic vision, DOD is not in a position to

communicate how it intends to improve its approach to service 

acquisition. DOD’s primary policy for managing service acquisition came 

in the form of a memorandum issued in response to sections 801 and 

802 of the Fiscal Year 2002 National Defense Authorization Act. That 

DOD Has Not Communicated 

Its Vision for Managing Service 

Acquisition

Page 21 GAO-07-20 DOD Service Acquisitions
memorandum, issued in May 2002, noted DOD’s intent to move to a more 

strategic and integrated approach to the acquisition of services and the 

need to treat this area as seriously as it does that of hardware.20 Similarly, 

DOD and senior military department officials have testified on the need to

improve service acquisition management within their departments. 

Nevertheless, our discussions with command and buying activity officials 

found that while recognizing this need, without specific guidance from 

DOD, their acquisition practices remain unchanged. As a result, senior 

DOD leadership’s call for change has had limited impact on acquisition 

practices at lower levels within the department. 

Further, one of the biggest obstacles to a more strategic approach to 

service acquisition is breaking down cultural barriers at different levels 

and across various functions of the acquisition process. In that regard, 

officials noted that the acquisition and contracting communities often do

not have a shared vision for improving service acquisition or of their role

in such a vision. For example, DOD has acknowledged that the use of 

performance-based service contracting techniques is generally perceived 

as a “contracting” initiative, with the rest of the acquisition community 

generally not fully participating or embracing the initiative. Consequently, 

DOD and military department officials indicate that without senior 

leadership and commitment, it is difficult to get support for changes in 

business practices within the acquisition community. 

As part of its May 2002 policy, DOD required the development of a review 

process for individual service acquisitions, established oversight 

thresholds, and specified which service acquisitions are to be reviewed. In 

addition, it required the military departments to establish a similar 

management review process. DOD officials noted in 2003 that this 

approach, combined with several other initiatives, was expected to have

significant impact on the acquisition of services. The new management 

structure DOD implemented to address identified deficiencies associated 

with the management of services established three levels: (1) review by 

the Under Secretary of Defense (Acquisition, Technology, and Logistics) 

for services acquisitions valued over $2 billion; (2) review by the 

component or designated acquisition executive for service acquisitions 

valued between $500 million and $2 billion; and (3) review by a 

component-designated official for the acquisition of services valued at less

than $500 million. In response to this guidance, the Air Force, Army, and 

Changes to Supporting 

Structures, Processes, and 

Roles Have Had Limited Effect 

 20This policy memorandum was formalized on May 12, 2003. 

Page 22 GAO-07-20 DOD Service Acquisitions
Navy each developed individual service acquisition review processes and 

authorities to support the DOD review requirements and identified 

respective decision authorities responsible for conducting execution 

reviews to assess progress against metrics. 

DOD and military department officials with whom we spoke indicated that 

the review structure has provided the reviewing office with additional 

insight on high-dollar value service acquisitions. However, the Office of 

the Under Secretary of Defense (Acquisition, Technology, and Logistics) 

lacked complete information on the number and scope of acquisitions of 

which it was notified and therefore could not give us a definitive response 

as to how many transactions were formally reviewed. Officials from that 

office provided a list of 19 service acquisitions that had been notified for 

review—9 Army and 2 Air Force acquisitions, in addition to 8 acquisitions 

from the Office of the Assistant Secretary of Defense (Networks and 

Information Integration), which are subject to review under the guidance 

for major automated information systems—but provided no additional 

information on the results of those reviews. 

Data provided by officials at the military department level indicated that 

through September 2005, 69 acquisitions—representing just under 

3 percent of service obligations—had been reviewed by the Air Force, 

Army, and Navy under the new process (see table 2). 

Page 23 GAO-07-20 DOD Service Acquisitions
Table 2: Service Acquisitions Reviewed under DOD and Military Department Review Structure (dollars in millions) 

Review level/office Criteriaa

Number of 

proposed

contract actions

reviewed

Fiscal year 2005 

obligations from 

reviewed actionsb

Total fiscal year 

2005 obligations

for services

Percentage of

obligations from 

reviewed actions

Under Secretary of 

Defense (Acquisition, 

Technology, and 

Logistics) 

Proposed service actions 

valued at $2 billion or 

more. 

Unknown

Army 

Assistant Secretary of 

the Army (Acquisition, 

Logistics, and 

Technology) 

Deputy Assistant 

Secretary of the Army 

(Policy and 

Procurement) 

Proposed service 

acquisitions exceeding 

$500 million 

16 $326 $40,267 <1.0

Navy 

Assistant Secretary of 

the Navy (Research, 

Development, and 

Acquisition) 

Deputy Assistant 

Secretary of the Navy 

(Acquisition 

Management) 

Proposed actions 

exceeding $1 billion 

Proposed service 

acquisitions with a value 

between $500 million and 

$1 billion 

9 $353 $23,123 1.5

Air Force 

Program Executive 

Officer for Combat and 

Mission Support 

Proposed service 

acquisitions exceeding 

$100 million or 300 or 

more full-time equivalents 

for A-76 requirements. 

44c

$1,735 $21,896 7.9

Total 69 $2,414 $85,286 2.8

Source: DOD (data); GAO (analysis). 

a

DOD and the military departments can also review any service acquisition below established 

thresholds, but otherwise determined to be of special interest. 

b

Figures in this column may include obligations for contracts or orders that included products and 

research and development–related services. 

c

Does not include one classified acquisition that underwent review.

While the DOD reviews to date under this process have provided some 

additional visibility over high-dollar value service acquisitions, the reviews 

tend to focus more on ensuring compliance with applicable statutes, 

regulations, and other requirements, rather than on imparting a vision or 

Page 24 GAO-07-20 DOD Service Acquisitions
tailored method for strategically managing service acquisition. Senior DOD 

and military department officials noted that the process is generally not 

intended to review program or customer decisions made at lower levels 

within the department as to the need for the particular services or to have 

a post-contract award follow-up assessment to ensure expected outcomes. 

Also, the reviews have not positioned DOD to regularly identify 

opportunities to leverage buying power. Further, they noted that the 

reviews are largely perceived as a function and responsibility of the DOD 

contracting organization, rather than a shared responsibility of the entire 

acquisition community, to include the program office and other customers 

for services. 

Moreover, DOD’s policy does not require the Under Secretary of Defense 

(Acquisition, Technology, and Logistics) to actually review those 

acquisitions that exceed the $2 billion threshold. Service acquisitions that 

meet this threshold are first reviewed and approved at the military 

department level. In turn, the military departments notify the Under 

Secretary that a service acquisition exceeding the threshold is available for 

review. If there is no response within 10 days, the acquisition is allowed to 

proceed without further review. Additionally, at the military department 

level, most of the service acquisitions reviewed to date have been 

indefinite delivery/indefinite quantity contracts.21 There is no requirement 

to review individual task orders that are subsequently issued even if the

value of the task order exceeds the review thresholds. 

We spoke to many officials at buying activities that had proposed service 

acquisitions for review under this process. For the most part, they did not 

believe the review significantly improved those acquisitions and noted 

very few examples of occasions when, as a result of review feedback,

acquisition strategies were changed in a meaningful way. For example, the 

reviews tended to focus on compliance with applicable laws, regulations, 

and socioeconomic goals, such as small business participation or, in other 

words, that the business arrangements are proper—all of which are 

covered in the development of the acquisition strategy prior to the review. 

These officials indicated that the timing of the review process—which 

generally occurs well into the planning cycle—is too late to provide 

 21Indefinite-delivery/indefinite-quantity contracts establish basic terms in advance, enabling 

agency personnel to issue subsequent task or delivery orders for specific services or goods 

expeditiously. Orders must be within the contract’s scope, issued within the period of 

performance, and be within the contract’s maximum value. Federal Acquisition Regulation 

(FAR) Subpart 16.5 (2006). 

Page 25 GAO-07-20 DOD Service Acquisitions
opportunities to influence the acquisition strategy. These officials told us 

that the reviews would be more beneficial if they were conducted earlier 

in the process, in conjunction with the program office or customer, and in 

the context of a more strategic approach to how best to meet the 

requirement, rather than simply from a secondary or tertiary review of the

contract and in an area where they have considerable experience and 

expertise. In addition, contracting officials at one buying command stated 

that reviewing officials often lack the resources or technical expertise to 

provide useful and valuable feedback. 

DOD’s ability to effectively manage service acquisition at either the 

strategic or the transactional level is hindered by the absence of reliable 

data on which to make informed decisions. DOD and military department 

officials acknowledge that the DOD contracting information systems 

available to the locations we visited do not provide information on 

forecasted demands for services; current and reliable information on what 

services are currently being procured; or data to assess whether these 

services are being acquired in line with cost, schedule and performance 

goals, or otherwise meeting customer needs. 

Knowledge on Spending and 

Workforce Is Not Readily 

Available 

For its part, DOD has not identified the specific data it needs to better 

manage service acquisition outcomes or developed appropriate data

systems that are essential for providing the information necessary for 

improving results. According to DOD documentation, there are thousands 

of individual information systems that have been implemented over 

decades to meet various mission needs, and rather than providing usable

information, these systems can hinder collecting information needed by 

decision makers. Because these systems were developed independently—

often not designed to be interoperable with other such systems—it is a 

challenge to share data with other locations or higher organizational levels 

in support of broader planning and decision making. Even collecting basic 

information on high-dollar services often proves time-consuming. For 

example, in April 2005, DOD initiated a formal review of its service 

acquisition policy. According to DOD officials, after determining that its 

data systems were inadequate to identify and assess the status of service 

acquisition policy compliance, the department initiated a data call to each

of the military components asking for a status review of the top 20 service 

acquisitions in each military department since inception of the policy. This 

data call took more than 6 months to collect, review, and report basic 

contracting data. Further, the results did not provide the types of 

knowledge DOD had expected. 

Page 26 GAO-07-20 DOD Service Acquisitions
Finally, DOD has acknowledged that it faces significant workforce 

challenges that if not effectively addressed could impair the 

responsiveness and quality of acquisition outcomes. In response, DOD is in 

the process of identifying the current skill sets and gaps of the acquisition 

workforce that routinely are engaged in acquiring services. For example, 

DOD’s 2006 Human Capital Strategic Plan noted there are currently efforts 

to develop a comprehensive competency model for each functional career 

field including the technical tasks, knowledge, skills, abilities, and 

personal characteristics required of the acquisition workforce. Similarly, 

DAU officials noted that they are revising the training curriculum for 

acquisition personnel, in part to provide an increased emphasis on service 

acquisition. For example, DAU has an ongoing effort to identify the critical

competencies for service acquisition, determine which of these 

competencies require further workforce training, and develop the 

appropriate training. DAU officials stated the new courses will be initially 

targeted for contracting personnel. In addition, DOD officials stated that 

these courses will be made available to noncontracting acquisition 

personnel only as time and resources permit. 

DOD Transactional 

Approach Focuses 

Principally on Business 

Arrangement 

Our work found that at the transactional level, buying commands and 

activities have not significantly adjusted their acquisition practices since 

DOD implemented its new review structure. The current transactionallevel approach does not always take the necessary steps to ensure 

customer needs are translated into well-defined contract requirements or 

that post-contract award activities result in expected outcomes. Instead, 

DOD service acquisition management activities focus primarily on 

awarding the contract. Without clearly defined requirements and attention 

after the contract is awarded, DOD cannot be sure it is buying the right 

service or using an appropriate means to assess contractor performance. 

As a result, DOD is potentially exposed to a variety of risks, including 

buying things that do not fully meet customer needs or that should be 

provided in a different manner or with better results. 

DOD and military department officials consistently identified poor 

communication and the lack of timely interaction between the acquisition 

and contracting personnel as key challenges to developing good 

requirements. These officials noted that developing well-defined and 

clearly articulated requirements in outcome-based performance measures 

is difficult in and of itself, but the challenges can be reduced if both 

communities work together early in the process. Several officials 

identified actions they have initiated to improve working relationships, but 

acknowledged that results have not been uniformly achieved. In part, 

Communication Challenges 

Hinder Establishment of Good 

Requirements 

Page 27 GAO-07-20 DOD Service Acquisitions
these issues arise from cultural differences between the contracting and 

acquisition communities concerning their roles in managing various 

service acquisition elements. 

Generally the intended customer of a service, such as a program office, 

has the responsibility to identify what type of service it requires, the level 

of performance or quality needed, the period of performance, and the 

available budget. To avoid problems with the later stages of the acquisition 

process, and depending on the complexity of the services needed, early

involvement of the contracting and other functional communities is 

important. However, contracting officers we spoke with frequently 

commented that the initial statements of work prepared by the customer 

were often insufficient, unclear, or not expressed in performance-based 

terms, requiring considerable rework. In addition, officials told us it is 

important that contracting officers fully understand exactly what the 

customer needs in order to get the best business arrangement for the 

government. However, contracting officers did not always have the 

necessary knowledge or expertise to understand the requirement, such as 

translating specific requirements into the statement of work. According to

contracting officials, the resulting frustrations are heightened when 

customers identify the need to award a contract for the services in a short 

time period. 

Similarly, because services are generally funded on an annual basis, 

contracting officers are often faced with many pressures at the end of each 

fiscal year. For example, officials at the Navy Fleet Industrial Supply 

Center in Philadelphia noted the impact of DOD’s recent policy requiring 

contracting officers to approve task orders with a value of $100,000 or 

more if they are issued against a non-DOD contract.22 While this does 

provide greater visibility in an area of previous concerns, the officials we 

spoke to indicated that the policy was issued without first assessing the 

impact on the contracting workforce or whether the customer was fully 

aware of the new process requirements. Consequently, contracting 

personnel were faced with a significant increase in workload, much of it at

the end of the fiscal year. As many of these contracting officials had not 

been involved with the original negotiation or award of the contract, and 

because of the short time frames needed to issue the orders, they felt 

 22DOD established this requirement in response to concerns about the improper use of 

interagency contracts. 

Page 28 GAO-07-20 DOD Service Acquisitions
pressured to review and approve task orders without being able to fully 

assess whether the overall approach was the most effective or efficient.

The lack of technical knowledge and training was raised as an issue at 

several commands we visited. For example, at many locations, officials 

commented on the lack of contracting knowledge on the part of the 

customer. One contracting manager told us he would be willing to pay for 

contracting-related training for customers, so that they could better 

understand how to prepare various contract documents, such as a 

performance-based statement of work or an award fee evaluation plan. 

Contracting officials told us that such documents can be difficult to 

prepare without sufficient planning and input from customers who are 

familiar with what needs to be accomplished. Similarly, contracting 

officers at one location told us that they sometimes have to alter 

acquisition approaches because it is too difficult to develop evaluation 

plans that can be used by customers to effectively evaluate contractor 

performance. Program officials also commented on the lack of technical 

knowledge on the part of the contracting community. One Air Force 

program official told us that he is required to use the general base 

contracting office to procure advanced medical services, even though the 

contracting officers usually do not have related technical knowledge and

sometimes have difficulty understanding the requirement. Shared 

knowledge and communication are therefore important for ensuring that 

customers and contracting personnel are placed in the best position to 

achieve expected outcomes. 

Officials at some locations reported that better acquisition outcomes can

result from establishing effective working partnerships. For example, Air 

Force Space Command officials noted that one of their major service 

acquisitions involves support for base operations in Thule, Greenland. The 

Air Force has relied on contractors to provide these services for more than 

four decades and believed their experience on the program illustrates key 

aspects needed to promote a successful acquisition. These officials noted

that the service is a high priority and receives considerable attention from 

senior management. Additionally, the command employs a team-based 

approach to the acquisition, which means that personnel from both the 

customer and contracting communities are assigned and remain on the 

acquisition team throughout the development of the requirements, 

associated acquisition strategy, and contracting approach. Further, to help 

develop the requirements, the team receives considerable input from 

program personnel and the contracting officer’s technical representative 

as to the contractor’s performance, and makes use of monthly reports that 

measure key performance parameters. By including personnel from all 

Page 29 GAO-07-20 DOD Service Acquisitions
stages of the acquisition process—program managers, contracting officers, 

and quality assurance personnel—Space Command officials believed they 

were able to make adjustments to their requirements that allowed the 

contract to be priced in a manner that reduced cost risk to the 

government. Command officials and those involved in the Thule service 

acquisition acknowledge, however, that they have not been able to 

consistently replicate this success on all other acquisitions. 

Because of the recognized need to improve communication and share 

knowledge between customers and the acquisition workforce, some of the 

buying commands we visited have taken actions to promote 

communication and timely interaction. For example, the Army’s 

Communications and Electronics Command colocated senior contracting 

officers with customers to promote better communication and more 

cooperation between the two communities. These staff members, referred 

to as customer service representatives, establish early lines of 

communication by participating in management meetings with the 

customers to identify future acquisition needs. The representatives use 

this knowledge to help senior management in the contracting organization

identify resources and approaches to meet customer needs. 

Buying commands and activities we visited focused the majority of their 

attention on structuring business arrangements to ensure compliance with 

applicable laws and regulations. As a result, command officials generally

indicated that their previous practices were already in line with 

requirements established under DOD’s review process and therefore 

remain largely unchanged. In some cases, the commands have established 

additional procedures to review specific areas of interest, such as the 

proposed use of an interagency contract or to ensure that task orders 

under multiple award contracts comply with competition requirements. 

Business Arrangements 

Receive Majority of 

Management Attention, but 

Pressures to Meet Customer 

Needs Cited as Concerns 

Despite these reviews, however, we have identified examples of 

potentially poor contracting practices and the pressure to meet customer 

demands. For example,

• On one acquisition, an Army contracting officer issued a task order for 

a product that the contracting officer knew was outside the scope of 

the service contract. The contracting officer noted in an e-mail to the 

requestor that this deviation was allowed only because the customer 

needed the product quickly and cautioned that no such allowances 

would be granted in the future. 

Page 30 GAO-07-20 DOD Service Acquisitions
• The Navy has established Seaport-enhanced, a centralized electronic 

ordering system that competes and issues task orders for multiple 

customers for program management support contracts. The Navy 

instructed buying activities within its virtual system command 

structure to use Seaport-enhanced as the “mandatory method of 

choice” for these services. However, officials at one Navy buying 

command told us they plan to submit waivers to avoid using Seaportenhanced to meet their customer’s preference for using particular 

contractors and to use time- and-materials contracts, neither of which 

would be possible using Seaport-enhanced. 

• An Air Force contracting official noted that his office intended to 

award a number of contracts to local firms so that the firms, in turn, 

could have increased opportunities to provide services to other civilian 

and military organizations in the region, through marketing themselves 

as having been awarded a federal contract. 

While these cases are anecdotal, they indicate that some contracting 

officers feel pressured to meet their customers’ needs and had, or were 

considering, options that may not be in the bests interests of the 

government.

Command and buying activities we reviewed generally had limited 

capabilities to assess the degree to which their service acquisitions were 

successful. For example, few of the commands or activities could provide 

us reliable or current information on the number of service acquisitions 

they managed, and others had not developed a means to consistently 

monitor or assess, at a command level, whether such acquisitions were 

meeting the performance objectives established in the contracts. Many 

command officials noted the difficulties in doing so, since service 

acquisitions involve a wide range of activities that necessitate different 

measures of quality or performance from each other or from acquisitions 

involving products or major weapon systems. Often, these officials noted

that their measure of success is reflected in terms of customer satisfaction 

or the number of complaints received from the customers. 

Limited Capability to Assess 

Service Acquisitions 

Command officials noted that cost, delivery, or schedule performance 

measures may not be as effective on service contracts as for products or 

weapon systems. In this regard, the officials noted that services are often 

1-year efforts in which schedule performance provides limited insights. 

Similarly, these officials noted that many of their service contracts, which 

are often cost reimbursable or time-and-materials in nature, are funded on

a quarterly basis and are limited by the amount of funds made available. In 

Page 31 GAO-07-20 DOD Service Acquisitions
these cases, program officials noted that if more funds are made available 

than expected, the customer may increase the number of staff or labor 

hours to be provided; conversely, funding reductions will be reflected in 

commensurate reductions in the number of staff or labor hours. In either 

case, measuring changes in cost or hours is more reflective of the 

availability of funding, rather than an indication of contractor 

performance. Command officials noted that their information systems 

generally do not provide a capability to assess service acquisition 

outcomes. 

Additionally, the ability to conduct oversight within DOD’s management 

structure is often constrained by resources and workforce availability. For 

example, Air Force documentation suggests that 90 percent of planning 

activity is focused on getting the contract awarded, leaving very little for 

contract administration and oversight. Further, DOD officials noted that 

organizations like the Defense Contract Management Agency do not 

perform the same level of surveillance functions for services as they do for

products. The Defense Contract Management Agency generally assembles 

integrated program support teams to deliver support at prime contractor 

facilities, which in turn supply business and technical support and furnish 

program managers with insight into program execution at the prime 

contract level, as well as the major and critical subcontract tiers. Senior 

DOD officials told us that because services tend not to rise to the level of a 

program, the Defense Contract Management Agency does not always 

provide the resources to support those acquisitions. Rather, the contract 

administration task is often assigned to a local contracting officer 

technical representative. 

Attention to Strategic and 

Transactional Elements 

Has Improved Some 

Service Acquisition 

Outcomes 

Just as commercial firms have reported positives changes after 

implementing management approaches that include strategic and 

transactional elements, there are also examples where DOD has had 

similar success. DOD officials who report success stated that this can be 

achieved by paying attention to and addressing the risks inherent in each 

of the key elements in the service acquisition process—at both the 

strategic and the transactional levels. For example, the Air Force, in 

conjunction with the Army, developed a strategic approach to acquiring

wireless services and generated projected savings of 30 percent annually 

for just one of its service providers. According to Air Force officials, the

combination of sustained leadership support, good data, a supporting 

structure, and communication with and among customers mitigated risks 

and set the context for the transactional level to achieve good acquisition 

outcomes. The Air Force’s Chief Information Officer and the Deputy 

Page 32 GAO-07-20 DOD Service Acquisitions
Assistant Secretary for Contracting actively participated in establishing 

and supporting the development of the Information Technology 

Commodity Council, which is responsible for managing information 

technology-related strategic sourcing initiatives. Clear roles and 

responsibilities were established within the supporting structure of the 

council, including appointing a single individual to lead the initiative; 

identifying stakeholders who were responsible for developing the 

requirements; and establishing a team to perform market research and 

obtain other necessary data. 

The team responsible for obtaining the data upon which to base its 

acquisition decisions consisted of Army and Navy officials. These officials 

worked together to perform a market analysis to understand the 

marketplace, develop a spend analysis to understand current 

expenditures, and forecast future demand to understand the needs of the 

military departments individually, and of DOD as a whole. As a result of 

the team’s efforts, data are now available to help any agency within DOD 

save money when it acquires wireless services. 

Over the past 10 years, DOD has seen large growth in the acquisition of 

services, to the point where the value of these acquisitions exceeds the 

value of major weapon systems. To a large extent, this growth has not 

been a managed outcome. Congress, concerned over these rapid 

increases, has directed DOD to take several actions to promote more 

oversight and discipline in service acquisition. DOD has taken action, but 

action has not necessarily equated to progress. At this point, DOD is not in

a good position to say where service acquisition is today in terms of 

outcomes, where it wants service acquisition to be in the next few years, 

or how to get there. This makes it difficult to set the context within which 

individual organizations can make informed judgments on service 

acquisition transactions. Without this context, DOD will not be in a 

position to determine 

Conclusions 

• the current volume, type, location, and trends of service acquisition; 

• the results DOD wants to achieve in the next 3 to 5 years in each of 

these areas;

• the definition of a good service acquisition outcome; 

• the characteristics of a service acquisition that make it desirable, 

undesirable, or sensitive;

Page 33 GAO-07-20 DOD Service Acquisitions
• the risks that need to be managed at each stage of a transaction; and 

• the conditions under which a transaction should be referred for review. 

Given the diverse nature of services that DOD acquires, multiple sources 

of risk, and wide variety of organizations that are involved in individual 

acquisitions, until this basic information is available and understood, it 

may not be to possible to develop an ideal departmentwide review process 

or organizational structure. For example, while setting dollar thresholds as 

a basis for reviewing an individual service acquisition is an improvement 

over no review, dollars are not always a good proxy for risk. Moreover, 

when a service acquisition reaches the review stage, the requirement and 

proposed business arrangement are set and expediency becomes an issue 

as the contract is ready to be awarded. Ultimately, the majority of 

individual service acquisition decisions will be made by organizations at 

the local level. The people making these decisions will have to make 

judgments regarding the risks and soundness of requirements, sources, 

competition, contract types, and execution follow-up. Their decisions will 

also trigger which acquisitions receive higher level review. Of primary 

importance now is to provide a context for these organizations in which 

they can make tailored decisions and recommendations that remain 

consistent with DOD’s overarching views of risk, desirable outcomes, and 

direction for service acquisition. That context does not yet exist. 

The strategic and transactional elements presented in this report can 

ultimately provide such a context. While not new, these elements, when 

considered together, offer the prospect of a cohesive approach—a 

necessary precursor to developing specific solutions to improve service 

acquisition outcomes. DOD will then be able to evaluate outcomes against 

expected results, provide the basis for making course corrections, and 

ultimately make service acquisitions a managed outcome. 

We recommend the Secretary of Defense adopt a proactive approach to 

managing service acquisition that leverages strategic and transactional 

elements. Specifically, we recommend that the Secretary of Defense take

the following six actions: 

Recommendations for 

Executive Action 

• establish a normative position of how and where service acquisition 

dollars are currently and will be spent (including volume, type, and 

trends); 

Page 34 GAO-07-20 DOD Service Acquisitions
• determine areas of specific risk that are inherent in acquiring services 

and that should be managed with greater attention (including those 

areas considered sensitive or undesirable in terms of quantity or 

performance); 

• on the basis of the above, clearly identify and communicate what 

service acquisition management improvements are necessary and the 

goals and timelines for completion; 

• ensure that decisions on individual transactions are consistent with 

DOD’s strategic goals and objectives; 

• ensure that requirements for individual service transactions are based 

on input from key stakeholders; and

• provide a capability to determine whether service acquisitions are 

meeting their cost, schedule, and performance objectives. 

DOD provided written comments on a draft of this report. DOD concurred 

with each of our recommendations and identified actions it has taken or

plans to take to address them. These comments are reprinted in appendix

II. As part of its comments, DOD provided its October 2006 policy 

memorandum that implements Section 812 of the National Defense 

Authorization Act for Fiscal Year 2006. We did not reprint the policy as it is

publicly available through DOD’s acquisition website 

(www.acq.osd.mil/dpap/). DOD also provided technical comments, which 

we have incorporated as appropriate. 

Agency Comments 

and Our Evaluation 

DOD agreed that a more coordinated, integrated and strategic approach 

for acquiring services is needed. In particular, DOD noted that it is 

reassessing its strategic approach to acquiring services, including 

examining the types and kinds of services it acquires and developing an 

integrated assessment of how best to acquire such services. DOD expects 

this assessment will result in a comprehensive, departmentwide 

architecture for acquiring services that will, among other improvements, 

help refine the process to develop requirements, ensure that individual 

transactions are consistent with DOD’s strategic goals and initiatives, and

provide a capability to assess whether service acquisitions are meeting 

their cost, schedule and performance objectives. DOD expects its 

assessment will be completed in early 2007. 

Page 35 GAO-07-20 DOD Service Acquisitions
DOD also noted that it has taken a number of initiatives to improve 

specific issues associated with acquiring services. For example, DOD 

noted that its October 2006 policy will modify certain aspects of the 

current management structure, including providing lower dollar 

thresholds for reviewing proposed services acquisitions and requiring 

senior DOD officials to annually review whether service contracts were 

meeting established cost, schedule and performance objectives. Further, 

DOD noted that it had made organizational changes to improve its 

strategic sourcing efforts; it is assessing the skills and competencies 

needed by its workforce to acquire services; and the military departments 

and defense agencies are currently conducting self-assessments intended 

to address contract management issues we identified in our January 2005

high-risk report. 

While these efforts are steps in the right direction, they appear to be 

primarily incremental improvements to DOD’s current approach to 

acquiring services. Our discussions with DOD officials indicate that the 

architecture being developed may hold the potential for making the more 

fundamental changes at the strategic and transactional level that we have 

recommended. We have identified a number of elements that are needed 

at each of these levels, such as clearly articulating where DOD wants 

service acquisition to be in the next few years, setting the context for 

making informed and tailored decisions at the transactional level, and 

assuring that requirements are well-defined and consistent with DOD’s 

strategic objectives. The extent to which DOD successfully integrates 

these elements as it develops and implements its new architecture will be 

the key to fostering the appropriate attention and action needed to make 

service acquisitions a managed outcome. 

We are sending copies of this report to interested congressional 

committees; the Secretary of Defense; the Secretaries of the Air Force, 

Army, and Navy; the Commandant of the Marine Corps; and the Director, 

Office of Management and Budget. We will provide copies to others on 

request. This report will also be available at no charge on GAO’s Web site 

at http:/www.gao.gov. 

Page 36 GAO-07-20 DOD Service Acquisitions
If you or your staff have any questions about this report or need additional 

information, please contact me at (202) 512-4841 or francisp@gao.gov. 

Contact points for our Offices of Congressional Relations and Public 

Affairs may be found on the last page of this report. Staff 

acknowledgments are listed in appendix III. 

Paul Francis

Director 

Acquisition and Sourcing Management 

Page 37 GAO-07-20 DOD Service Acquisitions
Appendix I: Scope and Appendix I: Scope and Methodology Methodology 

To identify the key factors needed to improve service acquisition, we drew 

heavily on our prior work in this and other areas. We primarily used our 

January 2002 report that identified how leading commercial companies 

took a strategic approach to acquiring services.1

 In addition, we reviewed 

previous GAO reports related to overall contract management and those 

related to individual service contract transactions, specifically in areas 

such as business transformation, interagency contracting, strategic 

sourcing, and contract surveillance. To confirm and validate key factors, 

we held detailed discussions with relevant defense contracting experts in 

the Office of the Under Secretary of Defense (Acquisition, Technology, and 

Logistics); the Office of the Assistant Secretary of Defense (Networks and 

Information Integration); the Office of the Deputy Undersecretary of 

Defense (Business Transformation); the Office of the Assistant Secretary 

of Defense (Health Affairs); and the Defense Acquisition University. In 

addition, we spoke with various offices within each of the military 

departments, including the Air Force Program Executive Office (Combat 

and Mission Support); the Deputy Assistant Secretary of the Army (Policy 

and Procurement); the Assistant Secretary of the Navy (Research, 

Development, and Acquisition); and the Air Force Information Technology 

Commodity Council. 

To assess the extent to which the Department of Defense (DOD) 

approach, including its current management structure, exhibited these 

characteristics, we reviewed relevant DOD guidance and policy 

memoranda, including those that established its current management 

structure and review processes. We interviewed officials responsible for 

implementing the management structure within the Office of the Secretary 

of Defense, as well as each of the offices mentioned above. Discussions 

with these officials focused on DOD and military department service 

acquisition approaches, including those in put in place in response to 

sections 801 and 802 of the National Defense Authorization Act for Fiscal 

Year 2002 and other service contracting issues and initiatives. Data 

collected includes the number of service contract management reviews 

that have occurred under the newly implemented structure as well as the 

composition and purpose of those review boards. We obtained 

information on the types of activities and reviews conducted by these 

offices, including the number and value of service acquisitions they 

reviewed. 

 1

GAO, Best Practices: Taking A Strategic Approach Could Improve DOD’s Acquisition of 

Services, GAO-02-230 (Washington, D.C.: Jan. 18, 2002). 

Page 38 GAO-07-20 DOD Service Acquisitions
Appendix I: Scope and 

Methodology 

To document and analyze the processes by which individual military 

commands and buying activities acquired services, we visited 20 locations. 

We selected these locations based both on recommendations from DOD 

officials and from our own internal knowledge. While our selection of 

locations cannot be generalized to the population of all DOD contracting 

locations, those selected represented each of the military services and 

represented a range of DOD service types. Locations visited include: 

• Air Force Space Command, Colorado Springs, Colorado; 

• Air Force 21st Space Wing, Peterson Air Force Base, Colorado Springs, 

Colorado; 

• Air Force 50th Space Wing, Schriever Air Force Base, Colorado 

Springs, Colorado; 

• Air Force 460th Space Wing, Buckley Air Force Base, Aurora, 

Colorado; 

• United States Air Force Academy, Colorado Springs, Colorado; 

• Army Contracting Center of Excellence, Arlington, Virginia;

• Army Contracting Agency, Fort Carson, Colorado Springs, Colorado; 

• Army Communications and Electronics Command, Fort Monmouth, 

New Jersey; 

• Army Information Technology, E-Commerce and Commercial 

Contracting Center, Alexandria, Virginia; 

• Surface Deployment and Distribution Command, Alexandria, Virginia; 

• Naval Sea Systems Command, Washington Navy Yard, District of 

Columbia; 

• Naval Supply Systems Command, Mechanicsburg, Pennsylvania; 

• Navy Fleet and Industrial Supply Center, Philadelphia, Pennsylvania; 

• Navy Fleet and Industrial Supply Center, Norfolk, Virginia; 

• Navy Fleet and Industrial Supply Center, San Diego, California; 

• Naval Personnel Development Command, Norfolk, Virginia; 

• Navy Space and Warfare Command, San Diego, California; 

• Naval Education and Training Command (NETC), Pensacola Naval Air 

Station, Florida; 

• NETC Professional Development and Technology Center, Pensacola, 

Florida; and

• TRICARE Management Activity, Acquisition Management and Support, 

Aurora, Colorado. 

We conducted field observations at these locations and distributed a 

structured set of questions to solicit information from contracting officials 

designated to respond to our inquiry. Discussions with these officials 

focused on the level and type of contracting activity and service 

acquisition management approaches. These discussions centered on topics 

such as service acquisition culture and relationships between contracting 

Page 39 GAO-07-20 DOD Service Acquisitions
Appendix I: Scope and 

Methodology 

personnel and customers (including program office and user personnel), 

changes in policy and practice under the new review structure, challenges 

faced in acquiring services, efforts to improve individual service 

acquisitions; databases for capturing service contract data, performance 

based contracting, strategic sourcing, and other service acquisition 

initiatives. We discussed the review processes for selected service 

acquisitions (as determined by buying activity officials); including those 

that met criteria for review by either the Office of the Secretary of Defense 

or the military departments and, for comparison, those that were not 

subject to review at these levels. We reviewed contract file documentation 

to examine standard processes, review authority, requirements 

determination, and risk management activity. Information collected 

included contract solicitations, acquisition strategies, status reports, 

performance certifications; review and approval checklists, and other 

contract specific documents. 

Page 40 GAO-07-20 DOD Service Acquisitions
Appendix II: Comments from the Department Appendix II: Comments from the Department of Defense 

of Defense 

Page 41 GAO-07-20 DOD Service Acquisitions
Appendix II: Comments from the Department 

of Defense 

Page 42 GAO-07-20 DOD Service Acquisitions
Appendix II: Comments from the Department 

of Defense 

Page 43 GAO-07-20 DOD Service Acquisitions
Appendix II: Comments from the Department 

of Defense 

Page 44 GAO-07-20 DOD Service Acquisitions
Appendix II: Comments from the Department 

of Defense 

Page 45 GAO-07-20 DOD Service Acquisitions
Appendix II: Comments from the Department 

of Defense 

Page 46 GAO-07-20 DOD Service Acquisitions
Appendix II: Comments from the Department 

of Defense 

Page 47 GAO-07-20 DOD Service Acquisitions
Appendix III: GAO

Staff A

 Contact and 

cknowledgements 

Page 48 GAO-07-20 

Appendix III: GAO Contact and Staff 

Acknowledgements 

Paul Francis (202) 512-4841 or francisp@gao.gov 

In addition to the contact above, Tim DiNapoli, Assistant Director; 

Brian Mullins; Christina Cromley Bruner; Whitney Havens; 

Moshe Schwartz; Andrew Redd; Julia Kennon; and John Krump made 

key contributions to this report. 

 DOD Service Acquisitions

GAO Contact 

Acknowledgements 

(120415) 
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