HUMAN CAPITAL

Additional Steps 

Needed to Help 

Determine the Right 

Size and Composition 

of DOD’s Total 

Workforce

Report to Congressional Committees

May 2013

GAO-13-470

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-470, a report to 

congressional committees

May 2013

HUMAN CAPITAL

Additional Steps Needed to Help Determine the

Right Size and Composition of DOD's Total 

Workforce

Why GAO Did This Study

The federal government’s growing

fiscal challenges underscore the 

importance of DOD employing a 

strategic approach to determining the 

appropriate mix of its military, civilian, 

and contractor personnel to perform its 

mission, and determining the functions 

that are critical for the department to 

achieve its missions. A committee 

report accompanying the National 

Defense Authorization Act for Fiscal 

Year 2013 directed GAO to assess the 

measures DOD is taking to balance its 

workforce against its requirements. 

GAO examined (1) historical and 

projected workforce trends, (2) the 

actions DOD has taken to determine

an appropriate workforce mix, (3) the 

analysis DOD performs to identify core 

or critical functions, and (4) how DOD 

used its inventory of contracted 

services to inform budget submissions. 

GAO performed trend analysis to 

determine historical and future 

workforce levels. GAO also reviewed

relevant statutes, DOD and military 

department guidance, and budgetary 

submissions, and interviewed officials

from DOD and the Office of 

Management and Budget (OMB). 

What GAO Recommends

GAO recommends that DOD revise its 

policies and procedures to incorporate 

(1) legislative requirements for 

workforce planning and (2) federal 

requirements for the identification of

critical functions. GAO also 

recommends that DOD provide better 

information regarding contractor FTEs 

used in budget submissions. DOD 

noted actions that it has underway or 

planned to respond to these 

recommendations.

What GAO Found

Since fiscal year 2001, the Department of Defense’s (DOD) military and civilian 

workforces peaked in fiscal year 2011 at 3.1 million personnel combined, and is

projected to decrease over the next five years to below the fiscal year 2001 level

of 2.9 million. Comparable historical data on DOD’s contractor workforce are not 

available. In fiscal year 2011, DOD reported that it contracted for services 

performed by an estimated 710,000 contractor full time equivalents (FTEs)—a 

workforce equal to about 90 percent of the size of DOD’s civilian workforce of 

807,000 FTEs. Using fiscal year 2013 constant dollars, GAO’s analysis of DOD 

spending on contracted services shows obligations peaked in fiscal year 2010 at

about $195 billion, more than twice the amount spent in fiscal year 2001. This

spending decreased to about $174 billion in fiscal year 2012. 

DOD has taken some steps to improve its understanding and management of its 

total workforce; however, several shortcomings remain. Specifically, DOD has 

yet to assess the appropriate mix of its military, civilian, and contractor personnel 

capabilities in its strategic workforce plan as required by law. Further, DOD has 

not updated its policies and procedures to reflect current statutory requirements 

to use its civilian strategic workforce plan and the inventory of contracted 

services to determine the appropriate mix of personnel to perform DOD’s 

mission. Moreover, DOD’s strategic human capital plan does not contain certain

required elements and information and several factors limit the accuracy of its

inventory of contracted services. As a result, the department is hampered in 

making more informed strategic workforce mix decisions, which is crucial to 

meeting DOD’s congressional mandate to manage its total workforce. 

Although DOD is not required to perform analysis to identify a list of core or 

critical functions across the department as a whole, DOD has identified broad 

core mission areas of the department. However, its current policies do not fully 

reflect federal policy concerning the identification of critical functions. Office of 

Federal Procurement Policy Policy Letter 11-01 requires agencies to identify and 

ensure that they retain control over critical functions that are core to the agency’s 

mission, but may be contracted out to the private sector. DOD’s policies and 

procedures predate the publication of this requirement, and consequently contain 

no reference to it. Absent specific policies and procedures on this process, DOD 

may lack assurance that it retains enough government employees to maintain 

control over these important functions. 

DOD components used various methods and data sources, including their 

inventories of contracted services, to estimate contractor FTEs for budget 

submissions, but GAO’s analysis found that the contractor FTE estimates have 

significant limitations and do not accurately reflect the number of contractors 

providing services to DOD. Components encountered challenges, to include the 

use of estimating techniques based on inventory data that may not be accurate 

and the lack of a crosswalk between the inventory and specific budget codes. 

While the Army has a process that addresses these challenges, it may be 

several years before the remaining DOD components are able to do the same. 

DOD is taking steps to help the remaining components address these 

challenges, but, in the meantime, the budget does not provide an explanation of 

how the contractor FTE estimates are derived and what limitations apply.

View GAO-13-470. For more information, 

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

farrellb@gao.gov or Timothy J. DiNapoli at 

(202) 512-4841 or dinapolit@gao.gov
Page i GAO-13-470 Defense Workforce

Letter 1 

Background 8

DOD Projects Its Military and Civilian Workforce to Decrease, but 

Comparable Data on DOD’s Contractor Workforce Are Not 

Available 15

DOD Has Taken Some Steps Useful for Determining the 

Appropriate Mix of Its Workforce, but Shortcomings Remain 28

DOD Defines the Core Missions of the Department, but Current 

Policy Does Not Fully Reflect the Need to Identify Critical 

Functions 36

DOD Components Used the Inventory of Contracted Services and 

Other Data in Budget Submissions, but the Projections Have 

Significant Limitations 39

Conclusions 46

Recommendations for Executive Action 47

Agency Comments and Our Evaluation 47

Appendix I Recent GAO Recommendations for DOD’s Strategic Workforce 

Management 52

Appendix II Scope and Methodology 54

Appendix III Comments from the Department of Defense 57

Appendix IV GAO Contacts and Staff Acknowledgments 60

Tables

Table 1: Numbers and Percentages of Active Component, Reserve 

Component, and Civilian Workforce Changes from Fiscal 

Year 2001 to Fiscal Year 2011 and Projected Numbers and 

Percentages from Fiscal Year 2012 to Fiscal Year 2017 

(workforce numbers in thousands) 18

Table 2: Percentage of Active Component End Strength and 

Civilian Full Time Equivalent (FTE) Growth and Decline 

Contents 
Page ii GAO-13-470 Defense Workforce

from Fiscal Year (FY) 2001 to Fiscal Year 2011 by Force 

and Infrastructure Category 25

Table 3: Estimated Number of Contractor Full Time Equivalents 

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

Contracted Services 26

Table 4: Processes Used to Develop Contractor Full Time 

Equivalent (FTE) Projections in Fiscal Year 2013 Budget 

Submissions 43

Figures

Figure 1: DOD’s Reported Number of Active Component End 

Strength, Reserve Component End Strength, Civilian Full 

Time Equivalents (FTE), and Contractor FTEs, Fiscal 

Year 2011 9

Figure 2: Active and Reserve Components End Strength and 

Civilian Full Time Equivalents (FTE), Fiscal Years 2001 

through 2017 17

Figure 3: Obligations for Contracted Service Actions, Fiscal Years 

2001 through 2014 27
Page iii GAO-13-470 Defense Workforce

Abbreviations

CAPE Cost Assessment and Program Evaluation

CIS Comptroller Information System

CMRA Contractor Manpower Reporting Application

DAWDF Defense Acquisition Workforce Development Fund

DISA Defense Information Systems Agency

DLA Defense Logistics Agency

DOD Department of Defense

FAIR Act Federal Activities Inventory Reform Act of 1998

FPDS-NG Federal Procurement Data System – Next Generation

FTE Full time equivalent

FYDP Future Years Defense Program

OFPP Office of Federal Procurement Policy

OSD Office of the Secretary of Defense 

SAMAS Structure and Manpower Allocation System

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Page 1 GAO-13-470 Defense Workforce

441 G St. N.W.

Washington, DC 20548

May 29, 2013

The Honorable Carl Levin

Chairman

The Honorable James M. Inhofe

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Howard P. “Buck” McKeon

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

The Department of Defense (DOD) is one of the largest and most 

complex organizations in the federal government, and it is consequently 

one of the nation’s largest employers. DOD’s total workforce consists of 

three main components: military personnel (including the active military 

and the reserve and guard forces1

), civilians, and contractors providing 

support to the department. For fiscal year 2012, DOD budgeted for a 

military workforce of about 2.3 million active and reserve servicemembers 

and a civilian workforce of about 800,000 full time equivalents (FTEs),2

 

1

Within DOD’s military personnel component of its total workforce, the reserve and guard 

forces are comprised of the Army, the Navy, the Marine Corps, and the Air Force reserves 

and the Army and Air Force National Guards.

including foreign nationals and indirect hires. The active military and 

reserve and guard forces are charged with implementing the National 

Military Strategy and performing military essential functions in support of 

DOD’s various missions. DOD’s civilian workforce performs a wide variety 

of responsibilities, including providing care for active duty personnel, their 

dependents, and wounded servicemembers; managing financial 

accounting systems; and providing mission-essential combat-support 

functions that traditionally have been performed by the uniformed military, 

such as logistics support, maintenance, and carrying out cyber and 

2

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

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

 
 

Page 2 GAO-13-470 Defense Workforce

intelligence efforts. In addition, a key component of this workforce also 

provides deployable civilian experts to Afghanistan and other theaters of 

operation. Augmenting the military and civilian workforces, DOD has 

increasingly relied on contractors both overseas and in the United States 

to perform many of the same functions as civilian employees, including 

management support, communication services, interpreters who 

accompany military patrols, base operations support (e.g., food and 

housing), weapon systems maintenance, and intelligence. In its inventory 

of contracted services, DOD reported that it spent about $145 billion for 

contracted services in fiscal year 2011, provided by an estimated 710,000 

contractor FTEs.3

Presently, at the end of a decade that has seen two wars and growth in 

DOD’s costs for military and civilian personnel as well as contracted 

services, DOD faces increasing competition for resources as the federal 

government confronts growing fiscal challenges. For example, we 

previously reported that in fiscal year 2012, DOD budgeted approximately 

$72 billion for its civilian personnel

DOD’s workforce management is governed by a 

complex statutory and regulatory framework, and each component of 

DOD’s total workforce is governed by different rules that direct how the 

department manages its total workforce.

4

, an increase of approximately $12.6 

billion, or 21 percent, since fiscal year 2002.5

 

3

DOD is required to annually compile an inventory of contracted services, pursuant to 10 

U.S.C § 2330a, to include, among other data, the functions performed, the number of 

contractor FTEs performing the function, and the total dollar amount of the services 

purchased. For fiscal year 2011, we note that obligations reported for contracted services 

in budget justification materials and obligations reported in the inventory of contracted 

services differ. We have previously reported that a number of factors limit the accuracy 

and completeness of the inventory data, see, for example, GAO, Defense Acquisitions: 

Further Actions Needed to Improve Accountability for DOD's Inventory of Contracted 

Services,

In 2011, we reported that 

the active duty total compensation costs increased 32 percent from about 

$143.8 billion in fiscal year 2000 to about $189.4 billion in fiscal year 

2008, and that the federal government’s total estimated compensation for 

reserve and national guard members grew over 31 percent from about 

GAO-12-357 (Washington, D.C.: Apr. 6, 2012).

4

Civilian personnel include foreign nationals, which can be hired directly by DOD or 

indirectly hired under agreement or contract with foreign governments to provide personal 

services to the United States government 

5

GAO, Human Capital: Critical Skills and Competency Assessments Should Help Guide 

DOD Civilian Workforce Decisions, GAO-13-188 (Washington, D.C.: Jan. 17, 2013). 
 

Page 3 GAO-13-470 Defense Workforce

$17.8 billion in fiscal year 2001 to nearly $23.5 billion in fiscal year 2008.6

Further, DOD’s obligations for contracted services more than doubled 

from fiscal years 2001 to 2009.7 The sequestration as a result of the 

Budget Control Act of 20118 requires spending cuts in fiscal year 2013 

totaling about $40 billion through across-the-board, proportional 

reductions in funding provided in the appropriations acts for most defense 

accounts, including accounts related to DOD’s civilian workforce and 

contracted services. To prepare for the sequestration, the Secretaries of 

the Military Departments issued guidance in January 2013 to their 

respective departments to direct actions intended to reduce costs. 

Further, section 955 of the National Defense Authorization Act for Fiscal 

Year 20139

The current and long-term future fiscal pressures facing DOD underscore 

the importance of a strategic approach to recruit, develop, and retain the 

right number of individuals with the necessary skills and competencies for 

DOD to meet its mission and contract for services where appropriate. 

While progress has been made since we first placed strategic human 

capital management on our high risk list in 2001

calls for the Secretary of Defense to develop an efficiencies 

plan to achieve savings in funding for contractor and civilian workforces 

commensurate with the savings in military pay due to currently planned 

reductions to active duty end strength.

10—for example, through 

the various authorities and flexibilities provided to agencies for managing 

the federal workforce—this area remains one of significant concern. As 

we noted in February 2013, strategic human capital management in DOD 

and across the federal government continues to be a GAO high-risk area 

because critical skill and competency gaps could undermine agencies’ 

abilities to accomplish their missions.11

 

6

GAO, Opportunities to Reduce Potential Duplication in Government Programs, Save Tax 

Dollars, and Enhance Revenue, 

Current budget and long-term 

GAO-11-318SP (Washington, D.C.: Mar. 1, 2011). Both 

estimates used fiscal year 2008 constant dollars.

7

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

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

Jan. 14, 2011). 

8

Pub. L. No. 112-25 (2011) as amended.

9

Pub. L. No. 112-239, § 955 (2013).

10GAO, High-Risk Series: An Update, GAO-01-263 (Washington, D.C.: January 2001).

11GAO, High-Risk Series: An Update, GAO-13-283 (Washington, D.C.: February 2013).
 

Page 4 GAO-13-470 Defense Workforce

future fiscal pressures coupled with a potential wave of employee 

retirements could produce gaps in leadership and institutional knowledge 

that may threaten the government’s capacity to effectively address 

complex challenges. Strategic human capital planning that is integrated 

with broader organizational strategic planning is essential for ensuring 

that agencies have the talent, skills, and experience they need to costeffectively execute their current and future mission and program goals. 

Specifically, with regard to DOD, our work has emphasized that effective 

planning can enable the department to have the right people, with the 

right skills, doing the right jobs, in the right places, at the right time by 

making flexible use of its military and civilian workforces and appropriate 

use of contractors.12

Two key aspects of DOD’s implementation of total force management are 

determining the appropriate mix of its military, civilian, and contractor 

workforces and determining the functions that are critical for the 

department to achieve its missions. Congress has taken many steps to 

help ensure DOD appropriately manages its total workforce, and has 

passed legislation requiring DOD to conduct human-capital planning 

efforts for its civilian workforce. Specifically, since 2006, legislation has 

required DOD to periodically develop and submit to congressional 

defense committees a strategic workforce plan to shape and better 

manage the department’s civilian workforce.13 Further, legislation 

encouraged DOD to take a more holistic approach to its workforce 

requirements to achieve the appropriate balance, using all three 

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

prioritize the achievement of a workforce sufficiently sized and of the 

appropriate mix to carry out DOD’s mission over cost.14

 

12GAO, DOD Civilian Workforce: Observations on DOD’s Efforts to Plan for Civilian 

Workforce Requirements, 

Congress has 

also enacted new requirements and amended existing DOD workforce 

planning legislation to require inclusion of contracted services information 

in DOD’s total force planning efforts. The background section of this 

report provides an overview of these requirements, as well as other 

GAO-12-962T (Washington, D.C.: July 26, 2012).

13The National Defense Authorization Act for Fiscal Year 2010, Pub. L. No. 111-84, § 

1108 (2009) (codified as amended at 10 U.S.C. §115b) codified a previous strategic 

workforce plan requirement that was originally enacted by section 1122 of the National 

Defense Authorization Act for Fiscal Year 2006, Pub. L. No. 109-163 (2006).

1410 U.S.C. §129a.
 

Page 5 GAO-13-470 Defense Workforce

relevant legislation, requirements, and guidance that directs DOD to take 

steps regarding its strategic workforce management. Additionally, we 

have made a series of recommendations to DOD to better manage its 

total workforce and improve its strategic workforce plan. Appendix I lists 

our recent relevant recommendations made to DOD.

A committee report accompanying a bill for the National Defense 

Authorization Act for Fiscal Year 2013 directed GAO to assess DOD’s 

efforts to appropriately balance its current and future workforce structure 

against its requirements.15

To examine the historical and projected trends of the levels of military, 

civilian and contractor personnel in light of shifts in departmental 

priorities, we obtained data on active component end strength; the 

selected reserve within the reserve component end strength;

In this report, we examine: (1) the historical 

trends of the levels of military, civilian, and contractor personnel and the 

future projected trends for DOD’s workforce in light of shifts in 

departmental priorities; (2) the extent to which DOD has taken action to 

determine the appropriate workforce mix necessary to accomplish its 

mission; (3) the extent to which DOD conducts analysis to identify core or 

critical functions of the department; and (4) how the military departments 

and defense agencies used the inventory of contracted services to inform 

their fiscal year 2013 and 2014 budget submissions.

16 and 

civilian personnel FTEs, including foreign nationals and indirect hires;17

 

15H.R. Rep. No. 112-479 (2012).

and performed trend analysis on this data from fiscal year 2001 to fiscal 

year 2017. We relied on data from DOD’s fiscal year 2013 Future Years 

Defense Program (FYDP), the Comptroller Information System (CIS) from 

the Office of the Under Secretary of Defense, Comptroller, and other 

DOD budget documents. We determined that these data, collectively, 

were sufficiently reliable for use in discussing historical and future trends 

16For the reserve component, we included servicemembers from the Selected Reserve 

and excluded certain categories such as the Individual Ready Reserve and Inactive 

National Guard.

17According to DOD’s glossary of workforce terms, foreign national employees are local 

citizens of the host country or citizens of a third country. Foreign nationals can be direct or 

indirect hires. Direct hired employees are hired directly by an agency of DOD. Indirect hire 

civilians are foreign nationals assigned to support U.S. forces through contracts or 

agreements with foreign governments (or agencies thereof). These personnel are 

employees of the foreign governments involved.
 

Page 6 GAO-13-470 Defense Workforce

of the military and civilian workforces. We assessed the reliability of the 

data by comparing the data against other available data sources, 

conducting electronic testing of the data, and discussing any limitations of 

the data with appropriate DOD officials. DOD does not have comparable 

information on DOD’s contractor workforce, but to determine the size of 

the contractor workforce, we obtained estimates of contractor FTEs from 

DOD’s inventory of contracted services from fiscal year 2008 to fiscal 

year 2011. To report on obligated dollars for contracted services, we 

reviewed the obligated dollars for contracted services from fiscal year 

2001 to fiscal year 2012 and the projected obligations for contracted 

services from fiscal year 2013 to fiscal year 2014. We relied on budget 

data on obligations for contracted services. Based on discussions with

appropriate DOD officials and our comparison of the trends in the budget 

data against other data sources, we believe the contracted service 

obligation data are sufficiently reliable to serve as context of overall 

trends for contracted services. In addition, we interviewed officials from 

the Office of the Secretary of Defense (OSD) and military services 

regarding how shifts in departmental priorities are expected to impact 

workforce requirements.

To determine the extent to which DOD has taken action to determine the 

appropriate workforce mix to accomplish its mission, we reviewed 

relevant legislation that governs DOD total workforce management and 

departmental guidance concerning requirements for DOD to carry out 

such an assessment.18

 

1810 U.S.C. §115b.

We also interviewed OSD and military service 

officials to assess the actions DOD has taken to ensure it is employing 

the appropriate workforce mix. Specifically, we discussed the process 

DOD uses to determine which sector of the workforce should perform a 

given task based on the nature of the work involved, DOD’s process for 

identifying mission critical occupations as part of its strategic workforce 

planning process, and efforts by the services to improve their total 

workforce management in the future. We reviewed selected statutory 

requirements concerning the processes by which DOD is to determine its 

appropriate workforce mix. We then compared these requirements to the 

department’s efforts to date, and noted any differences.
 

Page 7 GAO-13-470 Defense Workforce

To determine the extent to which DOD conducts analysis to identify core 

and critical functions, we reviewed relevant legislation19 and federal policy 

and other guidance that requires the identification of inherently 

governmental and critical functions, including the Office of Federal 

Procurement Policy Policy Letter 11-01.20

To determine how the military departments and defense agencies used 

the inventory of contracted services to inform their fiscal year 2013 and 

2014 budget submissions, we focused our efforts on five DOD 

components—the departments of the Army, the Navy, and the Air Force, 

the Defense Logistics Agency (DLA), and the Defense Information 

Systems Agency (DISA). We selected these components based on the 

amount of their obligations for contracted services and the large number 

of contractor FTEs they identified in their fiscal year 2011 inventory of 

contracted services, the most current inventory available at the time of 

our review. We reviewed relevant guidance that directed the DOD 

components on how to use the inventory of contracted services to provide 

contractor FTE information in their budget submissions for fiscal years 

2013 and 2014. We also interviewed DOD officials regarding the 

guidance and ongoing initiatives intended to improve the accuracy of the 

inventory data to inform future budget submissions. In addition, we 

interviewed relevant budget and manpower officials from the five 

components we included in our review regarding the use of their 

inventories in the development of their fiscal year 2013 and 2014 budget 

submissions, and we obtained corroborating documentation from the 

three components that could provide it to determine the processes used 

Further, we reviewed 

departmental guidance concerning the need and process for identifying 

critical functions. We interviewed OSD and military service officials to 

determine the actions DOD has taken to define core or critical functions 

and respond to these requirements. Additionally, we met with officials 

from the Office of Federal Procurement Policy within the Office of 

Management and Budget to discuss their views on DOD’s implementation 

of those requirements contained in the 2011 policy letter regarding critical 

functions. We compared federal policy concerning the identification of 

critical functions to DOD’s efforts to date, and noted any differences.

 

1910 U.S.C. §129a.

20Office of Federal Procurement Policy Policy Letter 11-01, Performance of Inherently 

Governmental and Critical Functions (Sept. 12, 2011). 
 

Page 8 GAO-13-470 Defense Workforce

to develop contractor FTE information included in these budget 

submissions.

We conducted this performance audit from October 2012 to May 2013 in 

accordance with generally accepted government auditing standards. 

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

sufficient, appropriate evidence to provide a reasonable basis for our 

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

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. A more in depth discussion of 

our scope and methodology appears in appendix II of this report.

DOD’s total workforce is made up of three main components: military 

personnel (including the active military and the reserve and guard forces), 

DOD civilian employees21

 

21Civilian personnel include foreign nationals, which can be hired directly by DOD or 

indirectly hired under agreement or contract with foreign governments to provide personal 

services to the United States government.

, and contractor support. Figure 1 shows the 

number of the active and reserve components of the military, civilians, 

and estimated contractor FTEs that comprised DOD’s total workforce in 

fiscal year 2011.

Background 
 

Page 9 GAO-13-470 Defense Workforce

Figure 1: DOD’s Reported Number of Active Component End Strength, Reserve 

Component End Strength, Civilian Full Time Equivalents (FTE), and Contractor 

FTEs, Fiscal Year 2011

Notes: 

a

Active component end strength includes Army, Navy, Marine Corps, and Air Force servicemembers 

as of the end of fiscal year 2011.

b

The reserve component end strength includes the approximately 772,000 part-time and the 

approximately 76,000 full-time Army Reserve, Navy Reserve, Marine Corps Reserve, Air Force 

Reserve, Army National Guard and Air National Guard servicemembers in the selected reserve as of 

the end of fiscal year 2011. The reported reserve component end strength does not include the 

Individual Ready Reserve or the Inactive National Guard.

c

Civilian FTEs is an estimate of full time direct hires, indirect hires, and foreign nationals for fiscal year 

2011. Foreign nationals account for about 49,000, or 6 percent of the civilian workforce.

d

Dual status technicians are included in both the selected reserve part-time end strength and the 

civilian FTEs.

e

The number of contractor FTEs is DOD’s estimate based on data reported in its inventory of 

contracted services for fiscal year 2011.

Over the last decade, Congress has enacted or amended several laws 

that govern DOD’s management of its total workforce. These 

interconnected provisions provide a framework for DOD total workforce 
 

Page 10 GAO-13-470 Defense Workforce

management that requires DOD to adopt and enforce specific policies. In 

addition to those policy requirements, DOD is also required to submit 

information to Congress about its workforce and workforce planning, 

including, among other things, a strategic plan for shaping its civilian 

workforce, an annual inventory of contracted services and budget 

justification information concerning its contractor workforce. Other 

provisions govern the overall composition of DOD’s workforce, and 

outline the circumstances under which it is appropriate to convert 

performance of functions from one of the three workforce components to 

another. This section provides a high level overview of selected relevant 

provisions, as well as the major responsibilities regarding workforce 

management assigned to departmental leadership and organizations.

• 10 U.S.C. § 129a governs DOD’s general policy for total force 

management and was significantly amended in December of 2011. 

Section 129a now requires the Secretary of Defense to establish 

policies and procedures for determining the most appropriate and cost 

efficient mix of military, civilian, and contractor personnel to perform 

the mission of the department. These policies and procedures are 

required to clearly provide that attainment of a DOD workforce 

sufficiently sized and comprised of the appropriate mix of personnel 

necessary to carry out the mission of the department and the core 

mission areas of the armed forces takes precedence over cost. The 

law also specifies that these procedures shall specifically require DOD 

to use, among other things, the civilian strategic workforce plan (see 

10 U.S.C. § 115b below) and the inventory of contracted services (see 

10 U.S.C. § 2330a below) when making determinations regarding the 

appropriate workforce mix.

• 10 U.S.C. § 115b requires the biennial submission of a strategic 

workforce plan to shape and improve DOD’s civilian workforce. 

Among other things, the plan is required to address the appropriate 

mix of military, civilian, and contractor personnel capabilities, a 

requirement that DOD’s plan submissions have not addressed to 

date.22

• 10 U.S.C. § 2330a requires the Secretary of Defense to submit an 

annual inventory of activities performed pursuant to contracts for 

 

22GAO, Human Capital: DOD Needs Complete Assessments to Improve Future Civilian 

Strategic Workforce Plans, GAO 12-1014 (Washington, D.C.: Sept. 27, 2012). 
 

Page 11 GAO-13-470 Defense Workforce

services, which, among other things, is required to include information 

concerning the number of contractor employees, expressed as fulltime equivalents, subject to certain exceptions. Section 2330a also 

requires that the DOD component heads perform a review of the 

contracts and activities in the inventory to ensure that the activities on 

the list do not include inherently governmental functions or illegal 

personal services contracts, and, to the maximum extent practicable, 

do not include functions closely associated with inherently 

governmental functions.23

• 10 U.S.C. § 2463 requires the Secretary of Defense make use of the 

inventory of contracted services, compiled pursuant to 10 U.S.C. § 

2330a (above), for the purpose of identifying certain functions 

performed by contractors, to include closely associated with inherently 

governmental functions, critical functions and acquisition workforce 

functions, that should be given special consideration for conversion to 

civilian performance.

The inventory is also to be used to identify 

additional categories of functions for possible conversion to civilian 

performance pursuant to 10 U.S.C. § 2463 (below). Additionally, 

section 2330a requires DOD component heads to develop a plan, 

including an enforcement mechanism and approval process, to use 

the inventory to implement 10 U.S.C. § 129a (above), to inform 

strategic workforce planning, such as the plan required by 10 U.S.C. § 

115b (above), to facilitate the use of the inventory in the submission of 

budgetary information in compliance with 10 U.S.C. § 235 (below), 

and to perform conversions identified during the review described 

above.

 

23Inherently governmental functions are defined by law as functions that are so intimately 

related to the public interest as to require performance by federal government employees. 

Federal Activities Inventory Reform (FAIR) Act of 1998, Pub. L. No 105-270, § 5 (1998) 

(appended as a note below 31 U.S.C. § 501). There is currently an open Federal 

Acquisition Regulation case (2012-001) under consideration to implement a September 

2011 Office of Federal Procurement Policy Policy Letter that, among other things, clarified 

the definition of “inherently governmental function” (consistent with the FAIR Act 

definition). Office of Federal Procurement Policy, Policy Letter 11-01, Performance of 

Inherently Governmental and Critical Functions (Sept. 12, 2011). In addition, closely 

associated with inherently governmental functions are those that while not inherently 

governmental, may approach the category because of the nature of the function, the 

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

government administers performance under a contract. Federal Acquisition Regulation § 

7.503(d) provides examples of such functions.
 

Page 12 GAO-13-470 Defense Workforce

• 10 U.S.C. § 235 requires that the Secretary of Defense include (in the 

budget justification materials submitted to Congress) information that 

clearly and separately identifies both the amount requested for the 

procurement of contract services for each DOD component, 

installation, or activity and the number of contractor FTEs projected 

and justified for each DOD component, installation, or activity based 

on the inventory of contracts for services and the statutorily required 

reviews of the inventory data (see 10 U.S.C. § 2330a and 10 U.S.C. § 

2463 above).

Following DOD’s fiscal year 2010 announcement of its efficiency 

initiatives (including a cap on its civilian workforce FTEs at fiscal year 

2010 levels),24

• Section 808 of the National Defense Authorization Act for Fiscal 

Year 2012 (Pub. L. No. 112-81 (2011)) requires, among other things 

and subject to certain exceptions, that the total amount obligated by 

DOD for contract services in fiscal years 2012 and 2013 may not 

exceed the total amount requested for contract services in the fiscal 

year 2010 President’s budget. The fiscal year 2010 president’s budget 

was the baseline DOD used in developing its civilian workforce cap; 

the effect of this provision is to provide a parallel cap on contracted 

services working from a similar baseline.

and in light of the planned drawdown of military personnel, 

Congress enacted two additional provisions that shape the composition of 

DOD’s total workforce. 

25

• Section 955 of the National Defense Authorization Act for Fiscal 

Year 2013 (Pub. L. No. 112-239 (2013)) requires the Secretary of 

Defense to, among other things, develop an efficiencies plan for the 

civilian and contract workforces. The plan is required to achieve 

savings in the total funding of those workforces not less than savings 

achieved for basic military personnel pay from reductions in end 

strength over the same period of time, subject to certain exceptions. 

Among these exceptions are expenses for personnel performing 

 

24The initial cap announced in 2010 was directed to the Office of the Secretary of Defense 

and other headquarters commands. In fiscal year 2011, the cap was extended to include 

military departments.

25The two caps are not directly comparable because section 808 limits DOD’s 

expenditures for contracted services, whereas the civilian cap was focused on the number 

of civilian FTEs, not expenditures.
 

Page 13 GAO-13-470 Defense Workforce

critical functions identified by the Secretary of Defense as requiring 

exemption in the interest of the national defense.

Additionally, there is a body of guidance that relates to determining what 

work should be performed by each sector of the total DOD workforce, 

including an Office of Federal Procurement Policy Letter, and several 

DOD guidance documents. These documents, collectively, require that 

migration of work between DOD’s three workforce components be 

supported by analysis, and provide when the relevant components should 

be considered for performing new requirements.

• Office of Federal Procurement Policy Policy Letter 11-01: This 

policy letter, among other things, (1) clarifies what functions are 

inherently governmental, (2) explains how agencies must manage 

work that is “closely associated” with inherently governmental 

functions, and (3) requires agencies to identify “critical functions” to 

ensure that they have enough internal capability to retain control over 

functions that are core to the agency’s mission and operations.

• DOD Directive 1100.4: This directive outlines manpower 

requirements determination noting that national military objectives 

shall be accomplished with a minimum of manpower that is organized 

and employed to provide maximum effectiveness and combat power. 

It requires that military (active and reserve) and civilian manpower 

resources be programmed in accordance with validated manpower 

requirements, and within fiscal limits and acceptable levels of risk 

identified in defense planning and programming guidance.

• DOD Instruction 1100.22: This instruction outlines DOD policy and 

procedures for determining the appropriate mix of manpower (military 

and civilian) and private sector support (contractors).

• DOD Directive Type Memorandum 09-007: Provides business rules 

for use in estimating and comparing the full costs of military and DOD 

civilian manpower and contract support. It requires components to use 

certain business rules when performing an economic analysis in 

support of workforce decisions, which include determining the 

workforce mix of new or expanding mission requirements that are not 

inherently governmental or exempt from private-sector performance.26

 

26This is the subject of another, ongoing, GAO review in response to a mandate in the 

conference report accompanying the National Defense Authorization Act for Fiscal Year 

2013. 
 

Page 14 GAO-13-470 Defense Workforce

10 U.S.C. §§ 2461 and 2463 and OMB circular A-76 are also relevant 

to the subject of transitions between workforce types, depending on 

the type of transition.

Collectively, this body of law and guidance requires DOD to collect a 

variety of information for its decision makers to review and use in making 

strategic workforce management decisions. These requirements are 

especially significant in light of the current and long-term future fiscal 

pressures facing DOD, which will require identification of all of those 

functions currently being performed by each workforce sector, 

prioritization of those functions, and strategic determinations as to 

whether the performance of functions is appropriately distributed across 

these three sectors.

Several offices have responsibility for implementing these laws and 

regulations and managing the department’s total workforce. The Office of 

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

has overall responsibility for issuing guidance on manpower management 

to be used by the DOD components, providing guidance on manpower 

levels of the components, and developing manpower mix criteria and 

other information to be used by the components to determine their 

workforce mix. The Under Secretary of Defense (Comptroller) and the 

Director, Cost Assessment and Program Evaluation (CAPE) play key 

roles in determining the amounts budgeted for military and civilian 

personnel, as well as contracted services. The Under Secretary of 

Defense (Comptroller) is responsible for ensuring that the budget for DOD 

is consistent with the total force management policies and procedures.27

The Secretaries of the military departments and heads of the defense 

agencies have overall responsibility for the requirements determination, 

planning, programming, and budgeting for total force management 

policies and procedures,28 as well as having numerous responsibilities 

related to manpower management as detailed in DOD guidance.29

 

2710 U.S.C. § 129a(c)(4). 

For 

example, they are responsible for designating an individual with full 

authority for manpower management including: (1) implementing fiscal 

year guidance and manpower management policy within their respective 

2810 U.S.C. § 129a(c)(2).

29See e.g. Department of Defense Directive 1100.4, Guidance for Manpower 

Management (Feb. 12, 2005).
 

Page 15 GAO-13-470 Defense Workforce

component, (2) ensuring manpower levels are programmed to optimize 

readiness, (3) developing annual manpower requests for Congress, 

including the consideration of converting from one form of manpower to 

another, (4) conducting continuous review of manpower utilization plans 

and programs, and (5) establishing and maintaining manpower data 

systems that account for all manpower resources.

DOD’s data shows that since fiscal year 2001, its combined active, 

reserve, and civilian workforce peaked in fiscal year 2011 at 3.1 million 

personnel, and is projected by DOD to gradually decrease over the next 

five years to below its fiscal year 2001 level.30 Comparable historical data 

on the contractor component of DOD’s total workforce are not available, 

in part because DOD was not required to compile an annual inventory of 

activities performed pursuant to contracts for services until 2008. In its 

inventory for fiscal year 2011, DOD reported that about 710,000 

contractor FTEs were performing various functions under contracts for 

services—which is equal to about 90 percent of the size of DOD’s civilian 

workforce of 807,000 FTEs for that same fiscal year. Our analysis of 

DOD’s obligations for contracted services using fiscal year 2013 constant 

dollars shows DOD’s spending peaked in fiscal year 2010 at about $195 

billion, more than twice the amount spent in fiscal year 2001. Such 

spending decreased to about $174 billion in fiscal year 2012.

Our analysis of DOD’s military and civilian workforce data indicates that 

the collective growth in DOD’s military and civilian workforce peaked in 

fiscal year 2011 and is projected by DOD to gradually decrease over the 

next five years to below its fiscal year 2001 level, which was about 2.9 

million servicemembers and DOD civilians combined. In fiscal year 2011, 

DOD’s military and civilian workforce totaled about 3.1 million 

servicemembers and civilians, or about 139,000 more than fiscal year 

2001, with the most growth occurring within the civilian workforce. 

Specifically, in fiscal year 2011, DOD’s civilian workforce numbered about 

807,000 FTEs, an increase of 17 percent or 120,000 FTEs over fiscal 

 

30For purposes of this report, military workforce represents the end strength of the active 

components and the selected reserve in the reserve components. Civilian workforce is 

represented by civilian FTEs and includes full time direct hires, indirect hires, and foreign 

nationals. Dual-status technicians are included in both the selected reserve part-time end 

strength and the civilian FTEs.

DOD Projects Its 

Military and Civilian 

Workforce to 

Decrease, but 

Comparable Data on 

DOD’s Contractor 

Workforce Are Not 

Available 

DOD’s Military and Civilian 

Workforce Peaked in 

Fiscal Year 2011, but Is 

Projected by DOD to 

Decrease
 

Page 16 GAO-13-470 Defense Workforce

year 2001 levels. The active component of the military workforce 

increased by 3 percent, or about 40,000 personnel, to about 1.425 million, 

and the reserve component of the military workforce decreased by 2 

percent, or about 21,000 personnel, to about 848,000 during this same 

time period. By fiscal year 2017, DOD projects that its active component 

end strength will fall below its fiscal year 2001 level to about 1.32 million, 

and its reserve component end strength will continue to be below its fiscal 

year 2001 level. DOD projects that the civilian workforce will also 

decrease by fiscal year 2017 to about 784,000 FTEs—about 14 percent 

above its fiscal year 2001 level. Historically, the size of the civilian 

workforce has represented about a quarter of DOD’s combined military 

and civilian workforce.31

 

31We note that the size of a workforce does not equate to costs; an analysis of total 

compensation of pay and benefits associated with a workforce would be necessary to 

compare the costs of each workforce.

This ratio has remained relatively constant, 

ranging from 23 to 27 percent since the 1960s and reflects substitution 

between these workforces. Figure 2 shows the active component and 

reserve component end strength and civilian FTEs from fiscal year 2001 

through 2017.
 

Page 17 GAO-13-470 Defense Workforce

Figure 2: Active and Reserve Components End Strength and Civilian Full Time Equivalents (FTE), Fiscal Years 2001 through 

2017

Note: Data used for fiscal years 2001 through 2011 are actuals; those for fiscal years 2012 through 

2017 are DOD projections, as presented in the fiscal year 2013 Future Years Defense Program, the 

fiscal year 2013 President’s Budget, and certain data from the Comptroller Information System. Active 

component end strength includes the Army, the Navy, the Marine Corps, and the Air Force 

servicemembers as of the end of each fiscal year. The reserve component end strength represents 

the selected reserve and includes the part-time and the full-time Army Reserve, the Navy Reserve, 

the Marine Corps Reserve, the Air Force Reserve, the Army National Guard and the Air National 

Guard servicemembers as of the end of each fiscal year. Civilian FTEs is an estimate of full time 

direct hires, indirect hires, and foreign nationals for each fiscal year. Dual status technicians are 

included in both reserve component end strength and civilian FTEs.

Among each of the military services, military and civilian workforce growth 

differed over the course of the conflicts in Iraq and Afghanistan; however, 

most military services project a decrease in the military and civilian 

components of the workforce through fiscal year 2017. For example, from 

fiscal year 2001 through fiscal year 2011, the Army and the Marine Corps 

significantly increased the number of active component personnel to 

execute the warfighting effort, whereas during this same time period, the 

Navy and the Air Force decreased the number of active component 

personnel by 14 and 6 percent, respectively. During this period of time, 

the civilian workforce for all of the military services also increased. In light 

of the withdrawal from Iraq and planned withdrawal from Afghanistan, as 

well as changing priorities and missions, the Army, the Navy, and the 
 

Page 18 GAO-13-470 Defense Workforce

Marine Corps project decreases among both the active component and 

civilian workforce by 2017. The Air Force also projects a decrease in the 

number of active component personnel, but projects a civilian workforce 

increase of approximately 1 percent by fiscal year 2017. Collectively, the 

defense-wide organizations, which include the Office of the Secretary of 

Defense, the Joint Staff, and the Defense Agencies and Field Activities, 

project an increase of approximately 1 percent for their civilian workforce 

by fiscal year 2017. Table 1 shows the changes in the number and 

percentage of the military and civilian components of the workforce 

between fiscal years 2001 and 2011, with projected changes for fiscal 

years 2012 through 2017 by service.

Table 1: Numbers and Percentages of Active Component, Reserve Component, and Civilian Workforce Changes from Fiscal 

Year 2001 to Fiscal Year 2011 and Projected Numbers and Percentages from Fiscal Year 2012 to Fiscal Year 2017 (workforce 

numbers in thousands)

Actuals Projection 

FY2001 

FTE/end 

strength 

FY2011 

FTE/end 

strength 

FTE/end 

strength 

change from 

FY2001 to 

FY2011 

Percentage 

change from 

FY2001 to 

FY2011 

FY2012 

FTE/end 

strength 

FY2017 

FTE/end 

strength 

FTE/end 

strength 

change from 

FY2012 to 

FY2017 

Percentage 

change from 

FY2012 to 

FY2017

Active component

Army 481 565 85 18% 562 490 (72)a (13%)a

Navy 378 325 (53)a (14%)a 326 320 (6)a (2%)a

Marine Corps 173 201 28 16% 202 182 (20)a (10%)a

Air Force 354 333 (20)a (6%)a 333 329 (4)a (1%)a

Total active 

components 1,385 1,425 40 3% 1,423 1,320 (102)a (7%)a

Reserve componentd,e

Army Reserve 206 205 (1)a (0%)a 205 205 - 0%

Navy Reserve 88 65 (23)a (26%)a 66 57 (9)a (14%)a

Marine Corps 

Reserve

40 40 (0)a (0%)a 40 40 - 0%

Air Force 

Reserve

75 71 (4)a (5%)a 71 70 (2)a (3%)a

Army National 

Guard

352 362 10 3% 358 353 (5)a (1%)a

Air Force 

National Guard 108 106 (3)a (3%)a 107 101 (6)a (5%)a

Total reserve 

components 869 848 (21)a (2%)a 847 826 (22)a (3%)a
 

Page 19 GAO-13-470 Defense Workforce

Actuals Projection 

FY2001 

FTE/end 

strength 

FY2011 

FTE/end 

strength 

FTE/end 

strength 

change from 

FY2001 to 

FY2011 

Percentage 

change from 

FY2001 to 

FY2011 

FY2012 

FTE/end 

strength 

FY2017 

FTE/end 

strength 

FTE/end 

strength 

change from 

FY2012 to 

FY2017 

Percentage 

change from 

FY2012 to 

FY2017

Civilianbe

Army 220 284 64 29% 265 248 (18)a (7%)a

Navy 177 189 12 7% 190 189 (2)a (1%)a

Marine Corps 17 23 7 38% 24 24 (1)a (3%)a

Air Force 160 184 24 15% 186 187 2 1%

Defense-wide 

organizationsc 113 128 14 12% 136 137 1 1%

Total civilians 687 807 120 17% 801 784 (17)a (2%)a

Total active, 

reserves, and 

civilians 2,941 3,080 139 5% 3,071 2,930 (141)a (5%)a

Source: GAO analysis of DOD data.

Notes: All end strength and FTE figures are rounded to the nearest thousand. Totals might not add 

due to rounding.

a

All figures in parentheses represent declines.

b

Civilian FTEs is an estimate of full time direct hires, indirect hires, and foreign nationals for each 

fiscal year. Combatant command civilians are included in service totals

c

Defense-wide organizations include the Office of the Secretary of Defense, the Joint Staff, the 

Defense Agencies and Field Activities

d

The reserve end strength represents the selected reserve and excludes the Individual Ready 

Reserve and the Inactive National Guard

e

Dual status technicians are included in both reserve end strength and civilian FTEs.

DOD and military service officials identified several factors that 

contributed to changes in the size of the military and civilian components 

of the workforce since fiscal year 2001. For example, DOD officials noted 

that the conflicts in Iraq and Afghanistan, as well as recognition of the 

need to rebuild the acquisition workforce, which had been significantly 

reduced during the 1990s, and reduce DOD’s reliance on contractors 

contributed to the shape and size of the military and civilian sectors of the 

workforce over the past decade. Further, DOD cited other factors that led 

to growth within the civilian workforce, such as the department’s new 

cyber mission and areas specifically designated by Congress. The 

following are examples that DOD officials have cited as contributing to the 

change in the size and mix of DOD’s workforce.

Several Factors Affect the 

Size of DOD’s Workforce
 

Page 20 GAO-13-470 Defense Workforce

• Military to civilian/contractor conversion: DOD officials stated that 

about 50,000 military positions were converted to DOD civilian 

positions or contractor performance since fiscal year 2004 to devote 

more military positions to support of ongoing military operations. 

Conversion to civilian performance may not be one-for-one due to 

differences in military and civilian availability and productivity rates. 

For example, civilians who are typically hired must be qualified for 

their position, whereas military personnel often require on-the-job 

training in addition to technical training received prior to assignments. 

DOD’s military to civilian conversions were partly due to the high pace 

of operations that occurred after September 11, 2001, which created 

significant stress on the military’s operating forces. Further, in late 

2003, DOD reported that studies had found thousands of military 

personnel were being used to accomplish work tasks that were not 

military essential. DOD found that civilians or contractors could 

perform these tasks in a more efficient and cost-effective manner than 

military personnel. The Navy and the Air Force reduced their military 

end strength when functions performed by military billets, or positions, 

were converted to civilian or contractor performance. Conversely, 

when the Army and the Marine Corps converted functions performed 

by military billets to DOD civilians, they retained these military billets 

to be used in the operating force.

• Contractor to civilian conversion (in-sourcing): DOD officials 

noted that in-sourcing, or converting previously contracted functions to 

performance by civilians, has been an effective tool for the 

department to rebalance its workforce, realign inherently 

governmental and other critical and core functions to government 

performance, and in many cases, generate resource efficiencies for 

higher priority goals. In April 2009, the Secretary of Defense 

announced his intention to reduce the department’s reliance on 

contractors and increase funding for new civilian authorizations. In our 

February 2012 report, DOD officials stated that they could not 

determine the number of contractor FTEs whose functions were insourced because DOD contracts for services, not positions, 32

 

32GAO, Defense Workforce: DOD Needs to Better Oversee In-sourcing Data and Align Insourcing Efforts with Strategic Workforce Plans, 

and the 

number of contractor FTEs used to perform a service is determined by 

each private sector provider. Nonetheless, one of the data elements 

DOD is required to collect and include in its inventory of contracted 

GAO-12-319 (Washington, D.C.: Feb. 9, 

2012).
 

Page 21 GAO-13-470 Defense Workforce

services is the number of contractor FTEs performing each identified 

activity pursuant to a contract.

• Growth of acquisition workforce: DOD officials noted that 

rebuilding the acquisition workforce is another reason for growth. In 

our June 2012 report, we reported that according to DOD officials, the 

civilian acquisition workforce gained about 17,500 positions from fiscal 

year 2009 to December 2011.33 As noted previously, a portion of this 

growth was attributed to in-sourcing. The acquisition workforce had 

experienced significant erosion in some areas of expertise due to a 

nearly 50 percent cut in its workforce during the 1990s. This reduction 

took place as part of DOD’s larger effort to reduce its civilian 

workforce by nearly 20 percent overall during that time. When we 

evaluated DOD’s approach to this force reduction in 1992, we found 

that it was not oriented toward shaping the makeup of the workforce, 

resulting in significant imbalances in terms of shape, skills, and 

retirement eligibility.34 At that time, we found that the department’s 

efforts were hampered by incomplete data and lacked a clear strategy 

for avoiding the adverse effects of downsizing and minimizing skills 

imbalances. The downsizing produced serious imbalances in the skills 

and experience of the highly talented and specialized civilian

acquisition workforce, putting DOD on the verge of a retirement-driven 

talent drain that has had long-lasting implications. To help alleviate 

some of these long standing challenges and provide additional funds 

for the recruitment, training, and retention of acquisition personnel, in 

2008, Congress established the Defense Acquisition Workforce 

Development Fund (DAWDF).35 DOD officials stated that of the 

approximately 17,500 positions, about 5,850 were hired using 

DAWDF funds.

• Growth of cyber security workforce: DOD officials stated that focus 

on the new cyber mission increased the size of the cyber workforce. 

DOD’s 2010 Quadrennial Defense Review designated cyberspace 

 

33GAO, Defense Acquisition Workforce: Improved Processes, Guidance, and Planning 

Needed to Enhance Use of Workforce Funds, GAO-12-747R (Washington, D.C.: June 20, 

2012).

34GAO, Defense Force Management: Expanded Focus in Monitoring Civilian Force 

Reductions Is Needed, GAO/T-NSIAD-92-19 (Washington, D.C.: Mar. 18, 1992). 

35National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181, § 852 

(2008), codified at 10 U.S.C. § 1705. 
 

Page 22 GAO-13-470 Defense Workforce

operations as a key mission area and discussed steps the department 

was taking to strengthen capabilities in the cyber domain, including 

developing a department-wide comprehensive approach to DOD 

operations in cyberspace that will help build an environment in which 

cyber security and the ability to operate effectively in cyberspace are 

viewed as priorities for DOD. According to the Quadrennial Defense 

Review, to aid its efforts in countering cyberspace threats, DOD 

established the U.S. Cyber Command in 2010 to lead, integrate and 

better coordinate the day-to-day defense, protection, and operation of 

DOD networks. In November 2011, we reported that DOD established 

a cybersecurity workforce plan but faced challenges in determining 

the size of its cybersecurity workforce because of variations in how 

work is defined and the lack of an occupational series specific to 

cybersecurity.36 For these reasons, in February 2013, we included 

workforce planning for cybersecurity personnel as a factor in 

designating human capital management as a high risk area for the 

federal government.37

The withdrawal from Iraq and planned withdrawal from military operations 

in Afghanistan will impact both the military and, to some extent, the 

civilian workforce. DOD currently projects a reduction in its civilian 

workforce by 2 percent from fiscal year 2012 through fiscal year 2017. 

Several factors have prompted the department to develop plans to 

reshape and possibly reduce the numbers of civilians performing certain 

functions, while other needs may require additional civilian positions. 

DOD and military service officials identified the following factors as key 

drivers of projected future change within DOD’s total workforce.

• Shift in focus to Pacific region: DOD is refocusing its strategy in the 

Asia-Pacific region in the interest of promoting regional security with 

its allies in the area. DOD officials stated that this restructuring could 

result in a reshaped force and might require changes to installations 

and support as forces are restructured.

• Budget constraints and uncertainty: DOD, as well as the entire 

federal government, is currently operating in a fiscally constrained 

environment. The Office of the Secretary of Defense, the military 

 

36GAO, Cybersecurity Human Capital: Initiatives Need Better Planning and Coordination, 

GAO-12-8 (Washington, D.C.: Nov. 29, 2011). 

37GAO-13-283. 
 

Page 23 GAO-13-470 Defense Workforce

departments, and other organizations within DOD have issued 

guidance to their commands on immediate actions that can be taken 

to mitigate some, but not all, of the effects of a constrained budget in 

the near-term. Actions include implementing a civilian hiring freeze, 

reducing temporary employees, and furloughing the civilian workforce.

• Efficiency initiatives: As the federal government confronts growing 

fiscal challenges and DOD faces competition for funding, DOD 

announced efficiency initiatives in 2010, which the Secretary of 

Defense stated were to reduce duplication, overhead, and excess, 

and instill a culture of savings and restraint across the department. 

Some of the efficiency initiatives focused directly on civilian workforce 

levels, including the goals of reducing civilian positions in offices and 

commands across DOD, attempting to hold the civilian workforce level 

constant at fiscal year 2010 levels, the elimination of some civilian 

senior executive positions, and the disestablishment of the Business 

Transformation Agency and Joint Forces Command.

• Continued growth of cyber workforce: According to officials we 

spoke to from each of the services, DOD is continuing to focus its 

resources on emerging threats such as cyber attacks. For example, 

efforts are underway to further develop and implement the cyber 

mission. Each service has its own part in this mission and expects a 

continued hiring increase in civilian personnel with skills in 

cybersecurity. Further, the Secretary of Defense recently stated that 

the cyber mission is critical for the department and will continue to be 

an investment priority.

• Equipment reset: Military service officials stated that the equipment 

that returns from the military operations in Afghanistan will be sent to 

depots for repair and maintenance. Reset work, which is performed, in 

part, by the civilian workforce, will take two to three years to 

complete.38

• Medical assistance for returning servicemembers: More than a 

decade of fighting two wars has resulted in a large number of soldiers, 

marines, sailors, and airmen needing medical care, including, among 

other things, adjusting to the use of prosthetic limbs and treatment for 

 

38Reset refers to the repair, recapitalization, and replacement of military equipment in 

order to restore units’ equipment to a desired level of combat capability commensurate 

with mission requirements and availability of resources. 
 

Page 24 GAO-13-470 Defense Workforce

post traumatic stress disorder and traumatic brain injuries. DOD 

officials stated that it will be important to retain and recruit additional 

medical personnel to continue to provide for the medical needs of 

servicemembers, who can sometimes require long-term care.

We analyzed the active component of the military and civilian workforce 

to provide further perspectives on areas of growth between fiscal years 

2001 and 2011. Our analysis of active component end strength and 

civilian FTEs by force and infrastructure categories39 shows that between 

fiscal years 2001 and 2011, the civilian workforce generally grew while 

the active component workforce generally declined in most force and 

infrastructure categories compared to fiscal year 2001. For example, from 

fiscal year 2001 through fiscal year 2011, the acquisition infrastructure 

workforce40 and the defense health program civilian workforce grew by 15 

percent and 57 percent respectively, while the active component declined 

in those categories by 16 percent and 3 percent respectively. Further, 

according to DOD officials, the growth from fiscal year 2001 through fiscal 

year 2011 of the civilian workforce in certain categories such as operating 

forces and command and intelligence was in large part due to military to 

civilian conversions. Table 2 shows the growth and decline of various 

force and infrastructure categories.

 

39Force and infrastructure categories group forces—the warfighting tools of the 

Combatant Commanders—into broad operational categories according to their intended 

use and groups infrastructure, the set of activities needed to create and sustain forces, 

based upon the type of support activity it performs (such as force installations or central 

logistics).

40The acquisition infrastructure includes activities that develop, test, evaluate, and 

manage the acquisition of military equipment and supporting systems. These activities 

also provide technical oversight throughout a system’s useful life. 
 

Page 25 GAO-13-470 Defense Workforce

Table 2: Percentage of Active Component End Strength and Civilian Full Time 

Equivalent (FTE) Growth and Decline from Fiscal Year (FY) 2001 to Fiscal Year 2011 

by Force and Infrastructure Category

Growth/decline from FY2001 to FY2011

Force and Infrastructure Category Active component Civilian

Operating Forces 17% 58% 

Acquisition Infrastructure (16%)a 15% 

Central Logistics (46%)a (10%)a

Central Personnel Administration (31%)a 23% 

Central Personnel Benefits Programs (27%)a (7%)a

Central Training (13%)a (24%)a

Command and Intelligence 23% 93%

Communications and Information 

Infrastructure (29%)a (11%)a

Defense Health Program (3%)a 57% 

Departmental Management (5%)a 13% 

Force Installations (52%)a 32% 

Science and Technology Program (13%)a 35% 

Source: GAO analysis of DOD data.

a

All figures in parentheses represent declines.

b

Projected end strength by force and infrastructure category does not include end strength funded in 

supplemental appropriations.

Historical information on the trends of the contractor component of DOD’s 

total workforce since 2001 that would be comparable to information 

known about the military and civilian components is not available. This 

has occurred in part because DOD contracts for services, not individuals, 

and because DOD was not required to track such information until 2008 

when Congress required DOD to compile its first annual inventory of 

contracted services, starting with the services DOD contracted for in fiscal 

year 2007. To date, DOD has submitted annual inventories of contracted 

services to Congress for fiscal years 2007,41

 

41The Army was the only DOD component to submit information for DOD’s inventory of 

fiscal year 2007 contracted services.

2008, 2009, 2010, and 

Comparable Historical 

Data on Contractor 

Workforce Are Not 

Available, but Spending on 

Contracted Services Has 

Increased Significantly 

Since 2001
 

Page 26 GAO-13-470 Defense Workforce

2011.42 However, DOD officials cautioned against comparing the number 

of contractor FTEs reported across fiscal years because of differences in 

the estimating formula, changes in reporting for the research and 

development category, and other factors.43 In fiscal year 2011, DOD 

reported that about 710,000 contractor FTEs were performing various 

functions pursuant to contracts for services—about 90 percent of the size 

of DOD’s civilian workforce of 807,000 FTEs. Further, in its fiscal year 

2011 inventory, DOD reported that these 710,000 contractor FTEs 

provided services to DOD under contracts with obligations totaling about 

$145 billion.44

Table 3: Estimated Number of Contractor Full Time Equivalents (FTE) and 

Obligations as Reported in DOD’s Inventory of Contracted Services

Table 3 shows the total number of estimated contractor 

FTEs reported and obligation dollars reported in DOD’s inventory of 

contracted services for fiscal years 2008 through 2011.

Fiscal Year

Number of contractor 

FTEs reported

Obligation Total

(In billions)

2011 710,000 $145a

2010 623,000 $121a

2009 767,000 $155a

2008 655,000 $127a

Source: DOD’s inventory of contracted services.

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

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

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

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

fiscal years 2008 through 2011 inventory data. All full time equivalent figures are rounded to the 

nearest thousand.

a

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

 

42In December 2011, section 936 of the National Defense Authorization Act for Fiscal 

Year 2012 amended section 2330a of title 10 of the U.S. Code to clarify the types of 

contracted services to be inventoried include contracts for goods to the extent services are 

a significant component in a separate line item of the contract. 

43GAO-12-357. 

44DOD is required to annually compile an inventory of contracted services, pursuant to 10 

U.S.C § 2330a, to include, among other data, the functions performed, the number of 

contractor FTEs performing the function, and the total dollar amount of the services 

purchased. For fiscal year 2011, we note that obligations reported for contracted services 

in budget justification materials and obligations reported in the inventory of contracted 

services differ. We have previously reported that a number of factors limit the accuracy 

and completeness of the inventory data; see for example, GAO-12-357. 
 

Page 27 GAO-13-470 Defense Workforce

In terms of DOD’s obligations for contracted services, our analysis of 

DOD budget documentation using fiscal year 2013 constant dollars 

shows that DOD’s obligations on contracted services peaked in fiscal 

year 2010 at about $195 billion, more than twice the amount spent in 

fiscal year 2001, before decreasing to about $174 billion in fiscal year 

2012. Figure 3 shows the obligated dollars for contracted services for 

fiscal years 2001 through 2012 and the projected obligated dollars for 

fiscal years 2013 and 2014.

Figure 3: Obligations for Contracted Service Actions, Fiscal Years 2001 through 2014

Note: Fiscal year 2001 through 2012 are actual obligations, while fiscal year 2013 and 2014 represent 

projections. We relied on budget data on obligations for contracted services (object class 25). We 

excluded object class 25.3 that represents dollars obligated for goods and services from federal 

sources. We adjusted the current dollars to constant fiscal year 2013 dollars using the Gross 

Domestic Product price index to eliminate the effects of inflation.

In addition to the withdrawal from military operations in Iraq and 

Afghanistan, the decline since fiscal year 2010 and projected decline 

through fiscal year 2014 in obligations for contracted services can be 

attributed, in part, to several actions taken by Congress and DOD over 

the past several years. For example, in August 2010, the Secretary of 

Defense announced plans to reduce funding for a subset of service 
 

Page 28 GAO-13-470 Defense Workforce

contracts, service support contracts, by 10 percent per year from fiscal 

years 2011 to 2013. Moreover, DOD is subject to a statutory cap on 

obligations for contracted services for fiscal years 2012 and 2013, which 

may not exceed the amount requested in the President’s budget for fiscal 

year 2010, and we are required to report on the results of this effort later 

this year. More recently, in February 2013, the Office of the Assistant 

Secretary of Defense for Readiness and Force Management issued 

guidance stating that during this time of continued budget uncertainty, 

contracted services must continue to be reviewed to ensure the most 

appropriate, cost effective, and efficient support aligned to mission.

DOD has taken some steps to improve its understanding and 

management of its workforce, including service-specific efforts to obtain 

better data about the workforce; however, several shortcomings remain. 

Specifically, DOD has yet to include an assessment of the appropriate 

mix of military, civilian, and contractor personnel capabilities in its 

strategic workforce plan as required by law. Further, DOD has not 

updated its policies and procedures to reflect the most current statutory 

requirements to use its civilian strategic workforce plan and the inventory 

of contracted services to help determine the appropriate mix of personnel 

in its workforce.

DOD has taken some steps to develop better information and data about 

the size, capabilities, and skills possessed and needed by its workforce, 

but gaps remain. As part of the statutory requirement to develop a civilian 

strategic workforce plan, DOD has been mandated since 2006 to assess 

the critical skills and competencies of its current and future civilian 

workforce and to assess gaps in those areas.45

 

45National Defense Authorization Act for Fiscal Year 2006, Pub. L. No. 109-163 §1122 

(2006) (codified as amended at 10 U.S.C. § 115b). 

To date, DOD has 

developed and updated its strategic workforce plan four times. In its latest 

strategic plan issued in March 2012, DOD identified 22 mission critical 

occupations, which according to DOD are civilian personnel occupations 

that merit special attention based on their importance and the presence of 

human capital challenges. In September 2012, we issued a report on 

DOD’s March 2012 plan that found that DOD had conducted competency 

gap analyses for just 8 of the 22 mission critical occupations identified in 

DOD Has Taken Some 

Steps Useful for 

Determining the 

Appropriate Mix of Its 

Workforce, but 

Shortcomings Remain

DOD’s Efforts to Obtain 

Better Information on 

Workforce Capacity 

Continue to Face 

Challenges
 

Page 29 GAO-13-470 Defense Workforce

the plan, and it still did not contain an assessment of the appropriate 

workforce mix as required by law.46 Examples of occupations where DOD 

did not report conducting gap analyses included budget analysis, 

information technology management, and logistics management. Many of 

the occupations are associated with areas identified in our high-risk 

report.47

Further, section 115b of title 10 of the United States Code requires DOD 

to include in its strategic workforce plan an assessment of the appropriate 

mix of military, civilian, and contractor personnel capabilities.

We recommended that DOD conduct and report on gap analysis 

of its mission critical occupations, and DOD partially concurred with this 

recommendation and stated that it plans to complete competency gap 

analysis for mission critical occupations and other major civilian 

occupations by fiscal year 2015.

48 However, 

as we have previously reported, DOD did not include an assessment of 

the appropriate mix of military, civilian, and contractor personnel or an 

assessment of the capabilities of each of these workforces.49

 

46

In the most 

recent version of the strategic workforce plan issued in March 2012, DOD 

included information submitted by 11 functional communities, which are 

groups of employees who perform similar functions. We found that 2 of 

the 11 functional communities included in the plan—the medical and 

human resources functional communities—provided data on the mix of 

their workforces, while 9 communities provided partial or no data. For 

example, the logistics and information-technology functional communities 

provided only the military and civilian workforce data and did not include 

contractor workforce data. In September 2012, we recommended that 

DOD direct the functional communities to collect information that identifies 

not only the number or percentage of personnel in its military, civilian, and 

contractor workforces but also the capabilities of the appropriate mix of 

those three workforces, and DOD partially concurred with this 

GAO-12-1014. 

47GAO-13-283. 

4810 U.S.C. § 115b.

49GAO-12-1014; GAO, Human Capital: Further Actions Needed to Enhance DOD’s 

Civilian Strategic Workforce Plan, GAO-10-814R (Washington, D.C.: Sept. 27, 2010); 

Human Capital: Opportunities Exist to Build on Recent Progress to Strengthen DOD’s 

Civilian Human Capital Strategic Plan, GAO-09-235 (Washington, D.C.: Feb. 10, 2009); 

and The Department of Defense’s Civilian Human Capital Strategic Plan Does Not Meet 

Most Statutory Requirements, GAO-08-439R (Washington, D.C.: Feb. 6, 2008).
 

Page 30 GAO-13-470 Defense Workforce

recommendation. Further, in January 2013, we recommended that DOD 

use competency gap analyses to assist in decision making regarding the 

size of its civilian workforce.50

Congress has also required several actions to provide more complete and 

accurate information about DOD’s contractor workforce similar to the type 

of information DOD already has about its civilian and military workforces, 

such as the requirement, as noted previously, to compile an inventory of 

contracted services, including the number of contractor FTEs performing 

services for DOD and the type of functions they perform.51 Section 2330a 

of title 10 of the United States Code requires DOD to submit to Congress 

an annual inventory of contracted services. This section further requires 

each DOD component head to conduct comprehensive reviews of these 

services to determine, for example, whether they are inherently 

governmental, critical, or acquisition workforce functions, and whether 

performance of such functions by contractors should be converted to 

performance by the civilian workforce. Additionally DOD component 

heads are required to develop a plan, including an enforcement 

mechanism and approval process, to provide for the use of the inventory 

to implement the requirements of 10 U.S.C. § 129a, such as using the 

inventory in making workforce mix decisions, to inform strategic workforce 

planning, such as the strategic workforce plan required by 10 U.S.C. § 

115b, and to facilitate the use of the inventory for compliance with 10 

U.S.C. § 235, which requires the inclusion of certain contractor 

information in budget submissions. We previously reported that while 

DOD made a number of changes to improve the inventory, there were still 

factors that limited the utility, accuracy, and completeness of the inventory 

data. Therefore, we made a series of recommendations to DOD to further 

improve its inventory of contracted services.52

During the course of this review, we found that some of the military 

services are taking additional steps to better manage their civilian or total 

workforces. For example, Army officials stated that they developed a list 

of nearly 40 mission critical occupations that are specific to the Army, 

which are in addition to the department wide mission critical occupations 

 

50GAO-13-188. 

5110 U.S.C. § 2330a. 

52GAO-12-357 and GAO-11-192. 
 

Page 31 GAO-13-470 Defense Workforce

identified in the most recent version of the civilian strategic workforce 

plan, and that they plan to complete competency gap analyses for the 

Army-specific mission critical occupations by the end of 2014. Officials 

from the Marine Corps reported that they are developing a six step 

process for strategic workforce management planning to be implemented 

at the command level by late 2013. These officials stated that the process 

would include steps such as assessing current and future missions, 

performing gap analysis, and developing action plans to address gaps.

DOD’s primary policies for determining workforce mix—DOD Directive 

1100.4 and DOD Instruction 1100.22—largely reflect statutory 

requirements for DOD policies concerning workforce mix, though there 

are several recent amendments that have yet to be incorporated.53

Various OSD officials further noted that the requirements determination 

process is associated with the department’s Planning, Programming, 

Budgeting and Execution processes to help ensure fully informed risk and 

cost decisions are translated into justified and transparent manpower 

requirements. DOD Instruction 1100.22 states that the heads of the DOD 

components shall require their designated manpower authority to issue 

implementing guidance that requires the use of the instruction when 

manpower officials determine the workforce mix for current, new, or 

The 

directive provides general guidance concerning determining 

requirements, managing resources, and future planning, while the 

instruction provides manpower mix criteria and guidance for determining 

how individual positions should be designated based on the work 

performed. For example, the latter provides guidance concerning how to 

identify whether a task is inherently governmental, and consequently 

must be performed by military personnel or civilians, or whether a 

commercial activity should be performed by the contractor workforce or 

meets DOD criteria to exempt the activity from contract performance. 

Officials from the Office of the Undersecretary of Defense, Personnel and 

Readiness told us that they review shifts in trends among the various 

segments of the workforce, and that they rely upon the oversight of the 

military services to determine which segment of the workforce should 

perform specific types of work in accordance with DOD guidance.

 

53DOD Directive 1100.4, Guidance for Manpower Management (Feb. 12, 2005) and DOD 

Instruction 1100.22, Policy and Procedures for Determining Workforce Mix (Apr. 12, 

2010). 

DOD Has Not Updated Its 

Workforce Policies to 

Reflect the Most Recent 

Statutory Requirements for 

Workforce Mix 

Determinations
 

Page 32 GAO-13-470 Defense Workforce

expanded missions, or when revalidating manpower requirements, 

among other circumstances. Each military service has issued servicespecific workforce management guidance that implements the DOD-wide 

instruction as required and officials we spoke with from each service 

stated that the DOD-wide guidance was used when making workforce mix 

decisions. To make workforce decisions, manpower officials within the 

components are to identify the appropriate workforce component to 

perform the activity based on the nature of the work and circumstances of 

its performance as outlined in the instruction. Criteria are reviewed to 

determine if the work associated with the activity is an inherently 

governmental function, exempt from commercial performance, or suitable 

for performance by contractors, and for work that is inherently 

governmental or exempt from commercial performance, whether the work 

should be performed by military personnel or civilian personnel. The focus 

of the process of determining the workforce mix is primarily at the position 

level, as opposed to a holistic view of the overall appropriate mix of 

military, civilian, and contractor personnel.

DOD issued its directive and instruction in February 2005 and April 2010, 

respectively, prior to significant changes to relevant legislation in 

December of 2011.54 Prior to these 2011 changes, the legislation 

governing DOD’s personnel required that the department use the least 

costly form of personnel consistent with military requirements and other 

departmental needs. Section 129a was revised to clarify that when 

determining the most appropriate and cost efficient mix of military, civilian, 

and contractor personnel to perform the mission of the department, that 

the attainment of a DOD workforce sufficiently sized and comprised of the 

appropriate mix of personnel necessary to carry out DOD’s mission and 

the core mission areas of the armed forces takes precedence over cost. 

The law also specifies that the Secretary of Defense shall establish 

policies and procedures that shall specifically require DOD to use, among 

other things, the civilian strategic workforce plan55 and the inventory of 

contracted services56

 

54National Defense Authorization Act for Fiscal Year 2012, Pub. L. No. 112-81, § 931 

(2011) amending 10 U.S.C. §129a. 

when making determinations regarding the 

appropriate workforce mix. Although DOD Instruction 1100.22 had 

already addressed the requirement that risk mitigation take precedence 

55As required by 10 U.S.C. § 115b. 

56As required by 10 U.S.C. § 2330a. 
 

Page 33 GAO-13-470 Defense Workforce

over cost in making workforce decisions prior to the enactment of section 

129a, DOD has not yet implemented the new requirement that 

determinations regarding the appropriate workforce mix be made using 

the civilian strategic workforce plan and the inventory of contracted 

services. As a result, DOD decision makers may lack key elements 

necessary to make appropriate, informed decisions concerning DOD’s 

mix of personnel because the department has not updated its existing 

policies and procedures or issued new guidance for determining 

workforce mix that reflects the new statutory requirements. OSD officials 

stated that both DOD Directive 1100.4 and DOD Instruction 1100.22 are 

currently under revision, and stated that they intend to revise DOD 

Directive 1100.4 to require the use of the inventory of contracted services 

to inform budget requests and decisions for total force management. The 

officials provided a draft of the directive for our review and stated that is 

was in the early stages of coordination and review. DOD did not provide a 

draft of the instruction or discuss timelines for issuance of a revised 

instruction.

Related to the statutory changes to departmentwide workforce 

management, similar legislation requires certain defense components to 

use the inventory of contracted services as part of their strategic 

workforce management. Specifically, 10 U.S.C. § 2330a(e) requires that 

DOD component heads perform a review of the contracts and activities in 

the inventory to ensure that the activities on the list do not include 

inherently governmental functions or illegal personal services contracts, 

and, to the maximum extent practicable, do not include functions closely 

associated with inherently governmental functions. The review is also 

required to identify activities that should be considered for conversion to 

civilian performance pursuant to 10 U.S.C. § 2463. In 2012, our review of 

DOD’s fiscal year 2010 inventory of contracted services found that the 

military departments’ required reviews of their fiscal year 2009 inventories 

were incomplete, and that with the exception of the Army, DOD had much 

further to go in addressing the requirements for compiling and reviewing 

the inventories of contracted services.57

Additionally 10 U.S.C. § 2330a(f) requires the secretaries of the military 

departments and heads of the defense agencies to develop a plan, 

including an approval process and enforcement mechanism, to provide 

 

57GAO-12-357. 
 

Page 34 GAO-13-470 Defense Workforce

for the use of the inventory of contracted services to implement the 

requirements of 10 U.S.C. § 129a, to ensure the inventory is used to 

inform strategic workforce planning, such as the strategic workforce plan 

(as required by 10 U.S.C. § 115b), and to determine the appropriate 

workforce mix necessary to perform its mission. However, the extent to 

which the military departments have developed the required plans and 

accompanying approval process and enforcement mechanism varies. 

Some military department officials indicated that they are in the final 

stages of developing a plan to integrate the required information, and 

other military department officials stated that they plan to move forward 

once better information on contractors required by the inventory of 

contracted services becomes available. For example,

• Army manpower officials stated that the Army had conducted 

analyses that could support the required plan. Regarding the required 

enforcement mechanism and approval process, an Army official 

stated that the Army has established its Panel for the Documentation 

of Contractors review process, which requires commands to fill in a 

pre-award contract approval form in order to justify a request to 

procure services. This form asks executives to certify that contracted 

services do not include inherently governmental functions, among 

other things. In addition, the official stated that the Army’s annual 

inventory of contracted services, and its inventory review process, the 

Panel for the Documentation of Contractors, are intended to inform 

strategic workforce planning, provide information for in-sourcing 

decisions, and to the extent possible, inform budget requests.

• Air Force manpower officials stated that while the Air Force lacks a 

single plan, a number of separate efforts are moving towards the 

required elements of the plan. The officials stated that the Air Force 

plans to modify its manpower data system to accommodate the 

important contractor information captured in and required by the 

inventory of contracted services, and then define the utilization, 

approval and enforcement process in an Air Force Instruction.

• Navy manpower officials stated that the Navy has authorized the 

establishment of a Total Force Integration Board, including multiple 

stakeholders, to address all required elements. Marine Corps 

personnel officials stated that the Marine Corps is awaiting guidance 

from the Department of the Navy on a proposed plan and the related 

enforcement mechanism.

Given the absence of updated guidance and key data concerning each 

segment of its workforce, DOD lacks assurance that the performance of 
 

Page 35 GAO-13-470 Defense Workforce

key functions is properly balanced across the military, civilian, and 

contractor segments of its workforce to achieve the total force 

management objectives and avoid inappropriate operational risk. The 

absence of updated guidance and lack of accurate information 

concerning the activities performed by each segment of DOD’s workforce 

means that in the context of challenging fiscal realities, DOD leaders may 

lack knowledge to determine the most appropriate overall mix of military, 

civilian, and contractor personnel and competencies that could help them 

make more informed decisions concerning departmental priorities and 

associated costs. Our prior work has identified the need for DOD to obtain 

better data on its contracted services to enable it to make more strategic 

workforce decisions and ensure that it maintains appropriate control of 

government operations. For example, we previously reported in April 

2012 that reviews conducted by the Army and Air Force of their inventory 

of contracted services identified 1,935 and 91 instances, respectively, in 

which contractors were performing inherently governmental functions. 

However, in our 2012 report, we found that in several of those cases 

contractors were still performing that work and there were no clear lines 

of responsibility for addressing those instances.58 Army officials also 

noted that DOD’s decision to freeze civilian FTEs at fiscal year 2010 

levels was an impediment to resolving the performance of these 

inherently governmental functions by contractors. We note, however, that 

in January 2013 we found that despite obtaining exceptions to adjust their 

fiscal year 2012 targets above the fiscal year 2010 civilian FTE level, the 

Army exceeded its target; the Air Force and Navy met their target civilian 

FTE levels.59 Without better guidance and data that informs the 

determination of the appropriate mix, DOD may be challenged to fully 

meet legislative requirements regarding the management of its workforce

 

58GAO-12-357. 

59GAO-13-188. 
 

Page 36 GAO-13-470 Defense Workforce

DOD clearly identifies the core mission areas of the armed forces, which 

cover broad areas of military activity that the department is statutorily 

required to identify, but given the wide range of missions and 

responsibilities of its various components, DOD has not developed a list 

of “core or critical functions” for the department as a whole, nor is it 

required to do so. OMB policy requires executive agencies to identify 

critical functions in the context of contracting; but DOD’s current 

workforce mix policies do not fully reflect the need to identify critical 

functions, and as such the department may not have assurance that it 

properly identifies and retains the ability to maintain control over critical 

functions.

DOD clearly identifies the core mission areas of the armed forces, but it 

does not perform analysis to specifically identify a list of “core or critical 

functions.” Section 129a of Title 10 of the United States Code requires 

that the Secretary of Defense adopt policies that clearly provide that the 

attainment of a workforce sufficiently sized and comprised of the 

appropriate mix of personnel necessary to carry out the mission of the 

department and the core mission areas of the armed forces takes 

precedence over cost.60 The core mission areas of the armed forces are 

broad strategic military activities required to achieve strategic objectives 

of the National Defense Strategy and National Military Strategy, such as 

providing homeland defense and carrying out major combat operations, in 

support of DOD’s overall mission to deter war and provide for the security 

of the nation.61

Determining the core or critical work of the department can be 

complicated by the various contexts under which the terms “core” or 

“critical,” are used. For example, as discussed previously in this report, 

DOD identifies “mission critical occupations” in its strategic workforce 

plan. These are occupations that merit special attention based on their 

The core mission areas are identified in DOD’s 

Quadrennial Roles and Missions Review Report which is issued near the 

end of implementation of the department’s quadrennial defense review 

cycle. DOD manpower officials we spoke with stated that this top-level 

direction is communicated throughout the department.

 

6010 U.S.C. §129a. 

61The identification of core mission areas is pursuant to 10 U.S.C. § 118b.

DOD Defines the Core 

Missions of the 

Department, but 

Current Policy Does 

Not Fully Reflect the 

Need to Identify 

Critical Functions

DOD Clearly Defines Core 

Mission Areas
 

Page 37 GAO-13-470 Defense Workforce

importance and the presence of human capital challenges, and only apply 

to the civilian workforce. On the other hand, OMB policy requires that the 

executive agencies define “critical functions to ensure that they have 

sufficient internal capability to maintain control over certain functions that 

are core to the agency’s mission and operations.

DOD’s current workforce mix policy, DOD Instruction 1100.22, does not 

fully reflect the need to identify critical functions. Office of Federal 

Procurement Policy Policy Letter 11-01 (OFPP 11-01),62 issued in 

September 2011, requires agencies to identify “critical functions” to 

ensure that they have sufficient internal capability, in DOD’s case civilian 

and military personnel, to maintain control over functions that are core to 

the agency’s mission and operations, but are otherwise permissible to 

contract out to the private sector.63

DOD officials stated that they do not plan to develop a list of critical 

functions for the department as a whole because the missions of 

organizations within a department as large as DOD vary considerably, 

and that other designations serve the same purpose. Further, they stated 

a function that might be critical for one organization may be a lesser 

priority, and therefore not critical, for another. DOD officials told us that 

the designation of billets or positions as exempt from commercial 

performance (commercial-exempt billets) meets the intention of 

identifying critical functions. Based on guidance in DOD Instruction 

The identification of critical functions 

would help ensure that DOD can accomplish its mission even if 

contractors are unable to perform or otherwise default on their contractual 

responsibilities. While critical functions often represent important 

functions that may be necessary in support of the department’s mission, 

they do not include functions that are inherently governmental in nature, 

or functions that are closely associated with inherently governmental 

functions.

 

62Office of Management and Budget, Office of Federal Procurement Policy-Policy Letter 

11-01, Performance of Inherently Governmental and Critical Functions, September 2011. 

63In the context of strategic workforce management, the term “critical” has been used to 

describe a number of separate efforts. As noted above, mission critical occupations are 

civilian personnel occupations that merit special attention based on their importance and 

the presence of human capital challenges. The term “critical functions” refers to a function 

that is necessary to the agency being able to effectively perform and maintain control of its 

mission and operations. 

DOD Policy Does Not 

Fully Reflect Federal 

Requirements to Identify 

Critical Functions
 

Page 38 GAO-13-470 Defense Workforce

1100.22, DOD components review all billets on an annual basis to 

determine which segment of the workforce should perform certain types 

of work. The Instruction provides for a variety of reasons for which a billet 

may be given a commercial-exempt designation, thereby reserving that 

billet for performance by civilian or military personnel. However, under 

this Instruction, positions may be designated as commercial exempt for a 

variety of reasons aside from their possible consideration as critical, 

including reasons such as esprit d’ corps and professional development. 

It is therefore unclear how DOD can determine if the exemption of 

individual positions from commercial performance ensures that DOD 

maintains sufficient internal capability to retain control over critical 

functions.

DOD’s current guidance does not fully reflect the need to identify critical 

functions as required by federal policy because DOD has not updated its 

workforce policies and procedures to reflect the requirements of OFPP 

11-01. Officials from OFPP stated that many of the general principles 

behind OFPP 11-01 were reflected in DOD’s current guidance, but 

acknowledged that current DOD guidance may not specifically 

incorporate the concept of critical functions as defined by the policy letter. 

Part of the impetus for the guidance was the need to provide a consistent 

understanding of the term “critical functions”. Ensuring that DOD 

maintains sufficient internal capability to maintain control over its mission 

is a key aspect of ensuring that departmental officials have enough 

information and expertise to be accountable for the work product and can 

continue critical operations with in-house resources should contractor 

assistance be withdrawn. Absent specific policies and procedures that 

delineate requirements relating to critical functions and explain how 

components should identify these functions, DOD may lack assurance 

that it properly identifies and retains the ability to maintain control over 

critical functions. These efforts may be further hampered by the lack of 

sufficient information necessary for DOD to make strategic determinations 

of an appropriate workforce mix, as it may be difficult for the department 

to determine if it has sufficient internal capability to perform a critical 

function should contractors default on their responsibilities.
 

Page 39 GAO-13-470 Defense Workforce

DOD components we reviewed used various methods and data sources, 

including their inventories of contracted services, to project contractor 

FTEs for their fiscal year 2013 and 2014 budget submissions, but our 

analysis found that the components’ contractor FTE projections have 

significant limitations. DOD’s Comptroller directed DOD components to 

report contractor FTEs in their budget submissions that were consistent 

with both the inventories, and funding levels of contracted services. 

Among the challenges encountered by the DOD components in using the 

inventory of contracted services, however, are the use of estimating 

techniques based on inventory data that may not be accurate or current, 

and the lack of a crosswalk between the inventory of contracted services 

and specific budget lines of accounting. While the Army has a process 

that addresses these challenges, it may be several years before the 

remaining DOD components are able to do the same. DOD is taking 

steps to help the remaining components address these challenges, but, in 

the meantime, the budget does not provide an explanation of how the 

contractor FTE estimates are derived and what limitations apply. 

Disclosure of this information would help ensure that decision makers 

draw informed conclusions.

In December 2011, the Comptroller issued guidance to defense 

components instructing them to report contractor FTEs and funding levels 

for contracted services in their fiscal year 2013 budget submissions in 

accordance with 10 U.S.C. § 235.64

• provide contractor FTE data that were consistent with the inventory of 

contracted services they submit annually to the Congress,

Specifically, the guidance directed the 

components to:

• provide contractor FTEs that were consistent with the funding levels 

for contracted services, and

 

64Office of the Under Secretary of Defense (Comptroller), Fiscal Year 2013 President’s 

Budget Submission (Dec. 16, 2011). 

DOD Components 

Used the Inventory of 

Contracted Services 

and Other Data in 

Budget Submissions, 

but the Projections 

Have Significant 

Limitations 

DOD Components’ Budget 

Submissions Included 

Contractor FTE 

Information for Fiscal 

Years 2013 and 2014, but 

the Accuracy of these 

Projections Is 

Questionable 
 

Page 40 GAO-13-470 Defense Workforce

• report contractor FTE data and funding levels for contracted services 

in two separate budget exhibits in the operation and maintenance 

budget account.65

Though the Comptroller’s guidance does not specifically refer to it, 10 

U.S.C. § 235(b)(2) requires that contractor FTE projections for the budget 

submissions are to be based on both the inventory data and the reviews 

of that data that DOD components are required to conduct to identify 

whether contractors are performing services that should be converted to 

civilian performance.

DOD’s fiscal year 2013 budget, submitted in February 2012, included the 

information on contractor FTEs and related funding levels from the two 

operation and maintenance budget exhibits. Overall, DOD requested 

about $72 billion for contracted services in the operations and 

maintenance account and projected that roughly 285,000 contractor FTEs 

would be funded with that amount.66

Two of the five components we reviewed—the Air Force and the Navy—

used their inventories of contracted services as a starting point to derive 

the contractor FTE projections, but the data they relied on has significant 

limitations. To derive their projections, Air Force and Navy budget officials 

obtained the operation and maintenance budget requests for sub activity 

groups prepared by resource managers for fiscal year 2013 and divided 

these by an average contractor FTE cost figure derived from their fiscal 

year 2010 inventories. This resulted in estimates of contractor FTEs for 

the corresponding sub activity groups. For example, the Navy requested 

$166 million for contracted services related to mission and other flight 

operations activities for fiscal year 2013. Using the fiscal year 2010 

inventory and applying inflationary factors, the Navy used an average 

contractor FTE cost of $180,119 to derive a contractor FTE figure of 924 

for this sub activity group. Navy budget officials told us they used the 

same average contractor FTE cost for all of its different types of services.

 

65The guidance specified that the contractor FTE data were to be shown in budget exhibit 

OP-5, which provides detail by budget sub activity group, and that contracted services 

funding shown in OP-32, which provides an appropriation summary of price and program 

growth, were to be consistent with the OP-5 contractor FTEs.

66Office of the Under Secretary of Defense (Comptroller), Fiscal Year 2013 Operation and 

Maintenance Overview (February 2012).
 

Page 41 GAO-13-470 Defense Workforce

Both services’ fiscal year 2010 inventories were based primarily on data 

from the Federal Procurement Data System-Next Generation (FPDS-NG) 

system.67 DOD has acknowledged that FPDS-NG has a number of 

limitations that affect the utility, accuracy, and completeness of the 

inventory data. For example, FPDS-NG does not identify more than one 

type of service purchased for each contract action, is not able to capture 

any services performed under contracts that are predominantly for 

supplies, and cannot provide the number of contractor FTEs used to 

perform each service, among other things. DOD officials acknowledge 

that the use of derived average cost figures can result in inaccurate 

reporting of contractor FTEs. For example, Navy budget officials noticed 

that the funding for satellite lease services had decreased significantly, 

but the contractor FTE estimate related to the services remained stable. 

The budget officials believed that since the program had moved from the 

development phase of its life cycle to the maintenance phase, the number 

of contractor FTEs needed for the program would be less than 10 

compared to the approximately 1,000 FTEs calculated for budget 

purposes. The budget officials decided not to make adjustments to the 

projections because they wanted to use a consistent approach to derive 

the contractor FTEs. In January 2011, we reported that Army manpower 

and OSD officials raised concerns about the use of average labor rates 

and ratios to project contractor FTEs given the tendency of those 

averages to obscure variations in the underlying data.68 Further, our 

analysis showed that the use of these averages resulted in significant 

variations for some specific categories of services and particular 

contracts.69

For the fiscal year 2013 budget submissions, budget officials from the 

remaining three components we examined used other data sources they 

considered to be more reliable for their contractor FTE projections. These 

officials explained that the fiscal year 2010 inventories were not aligned to 

 

67FPDS-NG is the federal government’s primary data system for tracking information on 

contracting actions.

68GAO-11-192. 

69For example, our January 2011 report found that the Army, which does not use FPDSNG to compile its inventory, reported 113,713 contractor FTEs performing professional, 

administrative and management support services in their fiscal year 2009 inventory, but 

would have reported significantly fewer—65,408 FTEs—if they had used the average 

labor rates and ratios used by the Office of the Under Secretary of Defense for 

Acquisition, Technology and Logistics. See GAO-11-192. 
 

Page 42 GAO-13-470 Defense Workforce

their budget data, were outdated or were not appropriate for budget 

projection purposes. For example, DISA and DLA budget officials noted 

that the most current inventory data available at the time the components 

were preparing their fiscal year 2013 budgets reflected contracts that 

were active in fiscal year 2010. Further, component budget officials noted 

that object class codes (used in preparing the budget) and product 

service codes (used in tracking contracts in FPDS-NG) often did not have 

a direct relationship, making the translation between the two categories 

subjective. For example, object class 25.1, which is used to delineate 

advisory and assistance services, is broad enough to encompass 

numerous product service codes associated with multiple categories of 

services. As a result, DISA and DLA relied on program managers to 

provide their projections on what level of contractor FTEs would be 

funded by the operation and maintenance budget requests.

Army budget officials explained that they did not use the inventory data 

compiled from the Army’s Contractor Manpower Reporting Application 

(CMRA) system when preparing their fiscal year 2013 budget submission. 

The CMRA system is intended to capture data directly reported by 

contractors on each service performed at the contract line item level, 

including information on the direct labor dollars, direct labor hours, total 

invoiced dollars, the functions and mission performed, and the Army unit 

on whose behalf contractors are performing the services. It also captures 

selected information from FPDS-NG and the Army’s accounting systems 

(to include budget codes). While DOD’s AT&L and P&R leadership 

considers the Army as currently having a reporting process and 

infrastructure in place that fully complies with inventory legislative 

requirements, CMRA data was not available in time. Instead, budget 

officials relied on the Army’s Structure and Manpower Allocation System 

(SAMAS), which according to budget and program officials contains 

civilian, military, and contractor personnel information and is used during 

the Army’s program and budget development process. However, an Army 

manpower official explained that SAMAS does not include object class 

data, dollars projected for contracted services, or information on 

inherently governmental and closely associated with inherently 

governmental functions. Table 4 summarizes the methods used by DOD 

components in our review to derive their respective contractor FTE 

projections.
 

Page 43 GAO-13-470 Defense Workforce

Table 4: Processes Used to Develop Contractor Full Time Equivalent (FTE) Projections in Fiscal Year 2013 Budget 

Submissions

DOD 

Component

Source for contractor 

FTE estimate Processes used to develop contractor FTEs provided in budget submissions

Air Force Inventory of Contracted 

Services 

Used inventory to develop an average contractor FTE cost estimate. The cost 

estimate was then divided into the dollar value of specific budget activity groups to 

derive contractor FTE projections for those activity groups.

Navy Inventory of Contracted 

Services 

Used inventory to develop an average contractor FTE cost estimate. The cost 

estimate was then divided into the dollar value of specific budget activity groups to 

derive contractor FTE projections for those activity groups.

Army Structure and Manpower 

Allocation System 

Extracted contractor personnel information from Army’s manpower system

DISA Program Managers Estimated contractor FTEs based on data provided by program managers and 

statements of work

DLA Program Managers Used contractor FTEs provided by program managers

Source: GAO analysis of DOD information.

The Comptroller issued updated guidance in June 2012 for the fiscal year 

2014 through 2018 budget submissions. The updated guidance 

incorporated two significant changes from the 2011 guidance. The 

components are now required to (1) include contractor FTE estimates for 

not only the operation and maintenance account, but also for nonoperation and maintenance accounts including the procurement and 

research, development, test and evaluation budget accounts70

According to Navy and Air Force officials, for the fiscal year 2014 budget 

submission, they followed the same approach used to project contractor 

FTEs that they did for their fiscal year 2013 budget submission; that is, 

they derived an average contractor FTE cost from their fiscal year 2011 

inventory data. Therefore, the resulting projections will have the same 

limitations as their fiscal year 2013 projections. Navy and Air Force 

officials indicated that they used an average contractor FTE cost derived 

from their inventory to generate estimates for procurement and research, 

development, test and evaluation contractor FTEs in the same manner as 

and (2) 

report contractor FTE and budget data together, rather than separately for 

different budget accounts.

 

70Contractor FTE data that are informed by the inventory of contracted services are to be 

provided in the PB-32 budget exhibit, which provides a summary of price and program 

growth for the procurement and research, development, test and evaluation budget 

accounts, in addition to the OP-32 exhibit. 
 

Page 44 GAO-13-470 Defense Workforce

they did for operation and maintenance-related activities. DLA and DISA 

officials indicated that they followed the same process as they did for their 

fiscal year 2013 budget submission whereby they relied on inputs from 

their program managers.

According to Army budget officials, the Army used a different process to 

project contractor FTEs for their fiscal year 2014 budget submission. 

These officials told us that the Army used information contained in its 

inventory of contracted services, which was compiled using data from its 

CMRA system, as well as the results of its reviews as the basis for its 

fiscal year 2014 contractor FTE projections. Army budget and manpower 

officials noted that several factors facilitated the use of CMRA data for its 

fiscal year 2014 budget contractor FTE projections. First, Army budget 

officials noted that they received fiscal year 2011 CMRA data in sufficient 

time to use for the fiscal year 2014 budget submission. Further, as part of 

the Army’s inventory review process, when the individual commands 

reviewed the inventory data associated with their contracted services, 

they had assigned budget codes to the CMRA data so that it could be 

aligned with the Army’s budget lines of accounting. In this regard, during 

the Army’s inventory review process, Army command officials assigned 

budget codes to the CMRA contract data through a web based 

application. This process allowed budget officials to gain additional insight 

into the types of services included in each line of accounting, and align 

contractor FTES in the budget submissions in an easier and more 

transparent manner.

At the conclusion of our review, DOD released the fiscal year 2014 

Operation and Maintenance Overview, which reported that DOD 

requested about $52.5 billion for contracted services in the operations 

and maintenance account and projected that about 223,000 contractor 

FTEs would be funded with that amount. During our review of the 

document, we found that the funding amounts and the contractor FTE 

summary information for each military department did not match the 

figures that the military departments reported as part of their individual 

fiscal year 2014 budget submissions. When we inquired as to the 

possible reasons for the discrepancies, a Comptroller official, with 

knowledge of the Operation and Maintenance Overview document, told 

us that a variety of factors could have contributed to the differences, 

including that the overview document excluded Health Program and 

Research and Development contracts that the military services included 

in their budget documents. The Comptroller official, however, did not 

know the exact reasons for the discrepancies.
 

Page 45 GAO-13-470 Defense Workforce

DOD officials recognize that the contractor FTE information provided in 

their fiscal year 2013 and 2014 budget submissions had significant 

limitations, but noted that DOD has initiatives underway to improve the 

accuracy of components’ inventories of contracted services and the 

linkage between the inventories and budget data. However, according to 

DOD officials, these initiatives are not expected to be fully implemented 

for several years.

DOD officials stated that having a reliable, current inventory of contractor 

FTEs is a fundamental building block for developing future contractor FTE 

estimates. DOD has initiated efforts to improve inventory data by 

collecting manpower data directly from contractors, using the Army’s 

CMRA system as the model. To do so, DOD directed its components in 

November 2012 to include a reporting requirement in new and current 

contracts for services to collect direct labor hours from contractors, which 

can subsequently be used to calculate contractor FTEs performing each 

service or function. In addition, DOD is developing a department-wide 

CMRA system to collect and house this data. DOD officials expect to 

have a fully functional system available for all components to begin to use 

in fiscal year 2014 and that components will be in compliance with the 

reporting requirement by 2016.

One challenge identified by Comptroller and manpower officials is the 

need to link contractor manpower information in the inventories of 

contracted services to specific budget lines of accounting. There are 

approximately 2,200 contract codes, referred to as product and service 

codes, in the FPDS-NG inventory and the CMRA inventory that 

correspond to specific types of services which, according to acquisition 

officials, need to be linked to roughly 21 budget codes. According to an 

Army official, the Army CMRA as implemented contains both budget 

codes and product service codes; therefore, it is not be dependent on 

DOD’s crosswalk effort. For example, the Defense Acquisition University 

has mapped 17 product and service codes to one budget code related to 

printing and reproduction. According to an acquisition official, the 

department recently formed a working group comprised of officials from 

the acquisition community and the Comptroller’s office to develop a more 

complete crosswalk between the product and service codes and the 

budget lines of accounting. This acquisition official also told us that formal 

guidance related to the crosswalk is expected to be issued in April 2013 

and modifications to financial systems to capture product and service 

code information should occur in 2014.

DOD Is Taking Steps to 

Improve the Accuracy of 

Contractor FTE 

Projections Included in 

Future Budget 

Submissions 
 

Page 46 GAO-13-470 Defense Workforce

Finally, although DOD officials do not expect these initiatives to be fully 

implemented for several years, one could expect to see incremental 

improvements in the fidelity of contractor FTE projections as DOD 

components compile more accurate and complete inventories and 

conduct the required reviews of that inventory data.

DOD manages a large and diverse workforce that is tasked with 

accomplishing a wide variety of missions, from shipyard maintenance to 

cybersecurity. Over the past decade and in the context of fighting two 

wars, both the military and civilian parts of this workforce have grown in 

number, as has spending on contracted services, but the department now 

faces a changing environment that includes a strategic shift and a period 

of fiscal constraint that will likely last for some time. As DOD decides how 

to face these changes, total workforce management and planning will be 

important elements of ensuring the department’s continued ability to meet 

the unique requirements of its missions. To be successful, the department 

must carefully consider what critical skills and competencies are needed 

to meet these requirements, and what strategies it can use to monitor and 

plan for retaining those skills in its workforce. Ensuring that its guidance is 

up to date would aid the department in assessing an appropriate 

workforce mix, properly identifying critical functions as required by the 

Office of Federal Procurement’s Policy’s September 2011 memorandum, 

and mitigating inappropriate risks that may be posed by contractors 

performing certain functions.

Congress, recognizing the importance of identifying the extent to which 

DOD relies on contractors to help carry out its mission, has enacted new 

legislative requirements over the past five years requiring DOD to collect 

data on its contractor workforce and make determinations about the 

nature of the activities that contractors perform, and amended legislation 

to require DOD to include contractor workforce information in DOD’s 

strategic planning and total force management efforts and budget 

requests. DOD’s approach to including projected contractor FTE 

information in its fiscal year 2013 and 2014 budget requests had a 

number of limitations and DOD acknowledges that the FTE information 

does not accurately reflect the number of contractors performing work in 

support of DOD. The department is taking steps to improve the accuracy 

of the data contained in its inventory of contracted services and enable 

the inventory and required reviews to be used to project contractor FTEs 

for budgetary purposes, but it may be several years before DOD is able to 

do so.

Conclusions 
 

Page 47 GAO-13-470 Defense Workforce

To help ensure DOD’s workforce mix guidance reflects the current 

statutory requirements for total force management policy set forth in 10 

U.S.C. § 129a as well as the regulatory requirements set forth in the 

Office of Federal Procurement Policy’s September 2011 policy letter, we 

recommend that the Secretary of Defense direct the Under Secretary of 

Defense for Personnel and Readiness to revise DOD’s existing workforce 

policies and procedures to address the

• determination of the appropriate workforce mix, and

• identification of critical functions.

Until such time that DOD is able to accurately project contractor FTE 

estimates it presents in budget submissions using the inventories and 

required reviews, we recommend that the Secretary of Defense direct the 

Under Secretary of Defense (Comptroller) to include an explanation in 

annual budget exhibits of the methodology used to project contractor FTE 

estimates and any limitations of that methodology or the underlying 

information to which the methodology is applied.

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

both recommendations. DOD’s comments are reprinted in appendix III. 

Additionally, DOD provided technical comments on the draft report, which 

we incorporate as appropriate. We provided a draft of this report to the 

Office of Management and Budget, but we did not receive comments.

DOD made two overarching comments in its agency response to our draft 

report. First, DOD commented that it is concerned by the emphasis we 

placed on the strategic workforce plan as it relates to the department’s 

total force management and resulting workforce size and structure. DOD 

stated that the plan is an integral tool in informing policies and procedures 

for retention, recruitment, and accession planning and it helps inform the 

demographic makeup of its civilian personnel inventory, including the 

talent, competencies, education, and skills of that workforce. DOD stated 

that it uses a capabilities-based approach to determine the size and 

structure of the workforce needed to implement national military and 

security strategies. These capabilities are based on the department’s 

mission, function, and task hierarchy, and are informed by workload, risk 

mitigation, and resource availability. According to DOD, it justifies its 

workforce size based on mission workload, rather than competency or 

skill gaps. We agree that DOD’s mission workload should determine the 

size of its total workforce. However, the type of personnel—military, 

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
 

Page 48 GAO-13-470 Defense Workforce

civilian, or contractor—that performs the work is dependent on the nature 

of the work and circumstances of its performance. DOD is required by law 

to establish policies and procedures that require the use of the strategic 

workforce plan when making determinations of the appropriate mix of 

total workforce personnel necessary to perform its mission, and to include 

in the strategic workforce plan an assessment of the appropriate mix of 

military, civilian, and contractor personnel capabilities, which it has not 

included to date. While the primary focus of this report is not on DOD’s 

strategic workforce plan, we have reported in this and a body of prior 

work, that without knowledge of the skills and competencies that are 

necessary to perform its mission workload and any associated gaps in 

those skills and competencies, DOD may be challenged to appropriately 

identify its current and future civilian workforce needs. Moreover, without 

assurance that its civilian workforce possesses the necessary skills and 

competencies, DOD may not be able to readily convert the performance 

of a function from contractor to civilian personnel, should DOD determine 

that it would be more appropriate to do so. Therefore, a fully developed 

strategic workforce plan that addresses the statutory requirements to 

include an assessment of the appropriate mix of military, civilian, and 

contractor personnel capabilities and report on the results of competency 

and skill gap analysis, could serve as an important resource for the 

department as it makes workforce mix decisions, especially in light of 

current fiscal constraints and budgetary pressures.

DOD commented that it is also concerned by the apparent lack of 

reference in our draft report to the Planning, Programming, Budgeting, 

and Execution process carried out annually across the department, 

especially as these processes relate to the size and shape of the 

department’s total force. DOD explained that the process provides 

direction on spending levels, mission priorities, and strategic goals, which 

then impact decisions regarding force structure and operational 

capabilities, and ultimately addresses prioritization and resource 

alignment. We agree with DOD that the Planning, Programming, 

Budgeting, and Execution process is an important aspect of workforce 

planning and decisionmaking; both requirements and resources drive

workforce decisions. We noted in our draft report that various OSD 

officials stated that the workforce requirements determination process is 

part of the department’s Planning, Programming, Budgeting and 

Execution process to help ensure fully informed risk and cost decisions 

are translated into justified and transparent manpower requirements. 

Further, we noted the roles and responsibilities of the various offices 

involved in developing workforce requirements, including as part of the 

budget process. However, we also noted that a recently enacted statute 
 

Page 49 GAO-13-470 Defense Workforce

requires that DOD and prioritize the attainment of a workforce sufficiently 

sized and comprised of the appropriate mix of military, civilian and 

contractor personnel to carry out DOD’s mission over cost. Our report 

addresses steps DOD is taking to implement statutory requirements to 

develop and utilize certain policies, analyses, and tools to aid in making 

such workforce mix determinations. As DOD stated, the budgeting 

process involves prioritization of requirements and making trade-offs 

among competing needs as part of resource allocation. Therefore, having 

the most reliable and accurate information is imperative for making well 

informed budgetary and other workforce planning decisions. 

Consequently we believe, DOD should continue to take steps to obtain 

and develop the information and data that will allow it to make more 

informed and strategic workforce mix decisions, such as analyses of the 

gaps in skills and competencies within the civilian workforce, identification 

of the functions that are critical to the department’s mission, and the 

collection of more accurate and complete information regarding 

contractors performing work in support of DOD.

DOD partially concurred with our recommendation to revise the 

department’s existing workforce policies and procedures to address the 

determination of the appropriate workforce mix and identification of critical 

functions. As we noted in our report, DOD has not issued new guidance 

or revised existing guidance to reflect the current statutory and other 

federal requirements for total force management policy. Specifically, we 

reported that DOD’s primary policies for determining workforce mix—

DOD Directive 1100.4 and DOD Instruction 1100.22—largely reflect 

current statutory requirements set forth in 10 U.S.C. § 129a for DOD 

policies concerning workforce mix, though there are several recent 

amendments that have yet to be incorporated, such as that DOD has not

yet implemented the new requirements that determinations regarding the 

appropriate workforce mix be made using the civilian strategic workforce 

plan and the inventory of contracted services. Further, we reported that 

the guidance similarly does not reflect federal requirements for the 

identification of critical functions as required by Office of Federal 

Procurement Policy’s Policy Letter 11-01. In response to our draft report, 

DOD stated in its agency comments that DOD Directive 1100.4. is 

currently undergoing revision and entering the formal issuance process 

for signature by the Deputy Secretary of Defense. Further, DOD stated 

that the updated directive will authorize and direct the revision of the 

instruction. We noted in our report that OSD officials told us that they 

were in the process of revising both the directive and instruction, and they 

provided us with a draft of the revised directive. DOD should issue this 

revised guidance in a timely manner and ensure that revisions to both 
 

Page 50 GAO-13-470 Defense Workforce

guidance documents address statutory requirements related to 

determinations of the appropriate mix of the department’s workforce and 

federal requirements to identify critical functions in order for 

decisionmakers to make better informed decisions regarding the mix of 

personnel and ensure that the department retains enough government 

employees to maintain control of functions that are critical to its mission. 

DOD also partially concurred with our recommendation to include an 

explanation in annual budget exhibits of the methodology used to project 

contractor FTE estimates and any limitations of that methodology or the 

underlying information to which the methodology is applied. DOD stated 

in its agency comments that its financial management regulations and 

annual budget submission guidance memorandums issued by the Office 

of the Under Secretary of Defense (Comptroller) are the means used to 

explain budget exhibit preparation methodologies and the guidance 

directs how components are to develop and display budgetary estimates. 

DOD stated in its comments that this office will strengthen the annual 

guidance as improvements are made in the inventory of contracted 

services. Further, DOD stated that if a component’s methodology 

deviates from the process defined in the annual guidance, a footnote 

explaining the deviation will be included in the contracted services section 

of the Operation and Maintenance Overview book within the budget. We 

recognize DOD has efforts underway to improve its inventory of 

contracted services, including its use in providing contractor FTEs within 

its annual budget exhibits. While footnoting any component 

methodologies that deviate from DOD’s guidance is a step in the right 

direction, most components use methodologies that reflect inherent 

limitations that undermine the utility and accuracy of the FTE estimate. 

DOD acknowledged during the course of this review that the contractor 

FTE information provided in their fiscal year 2013 and 2014 budget 

submissions had significant limitations. Consequently, to improve 

transparency, we continue to believe that DOD should disclose the 

methodologies used and any limitations thereof until such time DOD is 

able to accurately project contractor FTEs.

We are sending copies of this report to the Secretary of Defense, the 

Under Secretary of Defense for Personnel and Readiness, the Under 

Secretary of Defense for Acquisition, Technology and Logistics, the 

Under Secretary of Defense Comptroller, the Office of Management and 

Budget, and appropriate congressional committees. In addition, this 

report will also be available at no charge on the GAO website at 

http://www.gao.gov. 
 

Page 51 GAO-13-470 Defense Workforce

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

contact us at (202) 512-3604 or farrellb@gao.gov or (202) 512-4841 or 

dinapolit@gao.gov. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. 

GAO staff who made major contributions to this report are listed in 

appendix V.

Brenda S. Farrell

Director

Defense Capabilities and Management

Timothy J. DiNapoli

Director

Acquisition and Sourcing Management
Appendix I: Recent GAO Recommendations for 

DOD’s Strategic Workforce Management

Page 52 GAO-13-470 Defense Workforce

GAO Product Prior Recommendation DOD Response

HUMAN CAPITAL: Critical 

Skills and Competency 

Assessments Should Help 

Guide DOD Civilian 

Workforce Decisions, 

GAO-13-188 (Jan. 17, 

2013)

Involve functional community managers and to the extent possible, use 

information from gap assessments of its critical skills and competencies as they 

are completed, to make informed decisions for possible future reductions or justify 

the size of the force that it has.

Partially Concurred

Document its efforts to strategically manage its civilian workforce and maintain 

critical skills and competencies for future reductions.

Partially Concurred

HUMAN CAPITAL: DOD 

Needs Complete 

Assessments to Improve 

Future Civilian Strategic 

Workforce Plans, 

GAO-12-1014 (Sept. 27, 

2012)

Direct the Under Secretary of Defense for Personnel and Readiness to include in 

the guidance that it disseminates for developing future strategic workforce plans 

clearly defined terms and processes for conducting these assessments.

Concurred

Conduct competency gap analyses for DOD’s mission-critical occupations and 

report the results. When managers cannot conduct such analyses, we 

recommend that DOD report a timeline in the strategic workforce plan for 

providing these assessments.

Partially Concurred

Establish and adhere to timelines that will ensure issuance of future strategic 

workforce plans in accordance with statutory timeframes.

Partially Concurred

Provide guidance for developing future strategic workforce plans that clearly 

directs the functional communities to collect information that identifies not only the 

number or percentage of personnel in its military, civilian, and contractor 

workforces but also the capabilities of the appropriate mix of those three 

workforces.

Partially Concurred

Enhance the department’s results-oriented performance measures by revising 

existing measures or developing additional measures that will more clearly align 

with DOD’s efforts to monitor progress in meeting the strategic workforce planning 

requirements in section 115b of Title 10 of the United States Code.

Partially Concurred

HUMAN CAPITAL: 

Complete Information and 

More Analyses Needed to 

Enhance DOD’s Civilian 

Senior Leader Strategic 

Workforce Plan, 

GAO-12-990R (Sept. 19, 

2012)

Conduct assessments of the skills, competencies, and gaps within all five career 

civilian senior leader workforces and report them in DOD’s future strategic 

workforce plans.

Concurred

DEFENSE 

ACQUISITIONS: Further 

Actions Needed to Improve 

Accountability for DOD’s 

Inventory of Contracted 

Services, GAO-12-357 

(Apr. 6, 2012)

Ensure that the military departments and defense components issue guidance to 

their commands that provides clear lines of authority, responsibility, and 

accountability for conducting an inventory review and resolving instances where 

functions being performed by contractors are identified as inherently 

governmental functions.

Partially Concurred

To ensure that the six instances we reviewed in which the Army identified that 

contractors were still performing functions it deemed inherently governmental, as 

well as those at Kwajalein Atoll, have been properly resolved, we recommend that 

the Secretary of the Army review these functions, determine the status of actions 

to resolve the issues, and, as appropriate, take necessary corrective actions.

Concurred

Appendix I: Recent GAO Recommendations 

for DOD’s Strategic Workforce Management
Appendix I: Recent GAO Recommendations for 

DOD’s Strategic Workforce Management

Page 53 GAO-13-470 Defense Workforce

GAO Product Prior Recommendation DOD Response

To ensure that the two instances we reviewed where contractors were still 

performing functions the Air Force had previously identified as inherently 

governmental are properly resolved, we recommend that the Secretary of the Air 

Force review these functions, determine the status of actions to resolve the 

issues, and, as appropriate, take necessary corrective actions.

Concurred

DEFENSE WORKFORCE: 

DOD Needs to Better 

Oversee In-sourcing Data 

and Align In-sourcing 

Efforts with Strategic 

Workforce Plans, 

GAO-12-319 (Feb. 9, 2012)

To enhance insights into and facilitate oversight of the department’s in-sourcing 

efforts, we recommend that the Secretary of Defense direct the Under Secretary 

of Defense for Personnel and Readiness to issue guidance to DOD components 

requiring that the components establish a process to help ensure the accuracy of 

any data collected on future in-sourcing decisions.

Partially Concurred

To improve DOD’s strategic workforce planning, we recommend that the 

Secretary of Defense direct the Under Secretary of Defense for Personnel and 

Readiness to better align the data collected on in-sourcing with the department’s 

strategic workforce plans and establish metrics with which to measure progress in 

meeting any in-sourcing goals.

Partially Concurred

Source: GAO. 
Appendix II: Scope and Methodology

Page 54 GAO-13-470 Defense Workforce

To determine the historical trends and future projections of the levels of 

military, civilian, and contractor personnel, we obtained relevant data and 

performed trend analysis. For our analysis of historical trends, we 

included fiscal year 2001 through fiscal year 2011 and, for our analysis of 

future projections, we included fiscal year 2012 through fiscal year 2017. 

At the time of our review, the fiscal year 2013 president’s budget 

contained the most recent data available for projections and it included 

actuals through fiscal year 2011 and projections for fiscal years 2012 

through fiscal year 2017. For our analysis of military end strength and 

civilian personnel FTEs, we relied on data from DOD’s Future Years 

Defense Program (FYDP), Office of the Under Secretary of Defense 

Comptroller’s Comptroller Information System (CIS) and DOD budget 

documents. For our analysis of growth within type of activity performed, 

we used force and infrastructure categories from the FYDP to provide 

further perspectives on areas of workforce growth from fiscal years 2001 

to 2011. We determined that these data were sufficiently reliable for use 

in discussing historical and future trends of the military and civilian 

workforce. Specifically, we reviewed previous GAO reports using 

workforce data, compared military and civilian personnel levels to 

published data, performed electronic testing, and discussed the reliability 

of the data with knowledgeable DOD and service officials.

Further, we interviewed DOD officials to obtain their views on the major 

drivers for workforce changes. For our analysis of historical trends of the 

contractor workforce, we reviewed DOD’s inventory of contracted 

services for fiscal years 2008, 2009, 2010, and 2011. We did not 

independently assess the accuracy or reliability of the underlying data 

supporting the fiscal year inventories. However, we reviewed our prior 

work, which addressed limitations of the inventory data. Due to the lack of 

consistent reporting of contractor FTE data, we reviewed the obligated 

dollars for contracted services from fiscal year 2001 through fiscal year 

2012 and the projected obligations for contracted services from fiscal year 

2013 through fiscal year 2014. We relied on budget data on obligations 

for contracted services (object class 25). Based on discussions with 

various OSD officials, we excluded object classes 25.3 that represent 

dollars obligated for goods and services from federal sources. We 

adjusted the current dollars to constant fiscal year 2013 dollars using the 

Fiscal Year GDP Price Index to eliminate the effects of inflation. GAO has 

designated DOD’s financial management area as high risk due to longstanding deficiencies in DOD’s systems, processes, and internal controls. 

Since some of these systems provide the data used in the budgeting 

process, there are limitations to the use of DOD budget data. However, 

based on discussions with appropriate DOD officials and our comparison 

Appendix II: Scope and Methodology
Appendix II: Scope and Methodology

Page 55 GAO-13-470 Defense Workforce

of the trends in the budget data against other data sources, we believe 

the contracted service obligation data are sufficiently reliable for showing 

overall trends for contracted services.

To determine the extent to which DOD has taken action to determine the 

appropriate workforce mix to accomplish its mission, we reviewed 

relevant legislation1 and departmental guidance2

To determine the extent to which DOD conducts analysis to identify core 

or critical functions, we reviewed relevant legislation,

concerning 

requirements for DOD to carry out such analysis. We also interviewed 

DOD and military service officials to assess the actions DOD has taken to 

ensure it is employing the appropriate workforce mix. Specifically, we 

discussed the process of categorizing parts of the workforce based on the 

nature of the work they perform, DOD’s process for identifying mission 

critical occupations as part of its strategic workforce planning process, 

and efforts by the services to improve implementation of its total 

workforce management in the future. We compared statutory 

requirements concerning the processes by which DOD is to determine its 

appropriate workforce mix to its efforts to date, and noted any differences.

3 federal policy,4 and 

departmental guidance5 concerning the process for identifying core or 

critical functions. We interviewed DOD and military service officials to 

explore the various ways in which “core” or “critical” functions could be 

defined and reviewed documents that supported those definitions.6

 

1

Including 10 U.S.C. §129a and 10 U.S.C. § 2330a. 

We 

interviewed DOD and military service officials to determine the actions 

DOD has taken to define critical functions and respond to federal 

requirements. Additionally, we met with officials from the Office of Federal 

Procurement Policy within the Office of Management and Budget to 

2

DOD Directive 1100.4, Guidance for Manpower Management, (Feb. 12, 2005) and DOD 

Instruction 1100.22, Policy and Procedures for Determining Workforce Mix, (Apr.12,

2010).

3

Including 10 U.S.C. §§ 129a, 235, 2330a, and 2463.

4

Office of Federal Procurement Policy Policy Letter 11-01, Performance of Inherently 

Governmental and Critical Functions- (Sept. 12, 2011, effective date Oct. 12, 2011). 

5

For example, DODI 1100.22 (Apr. 12, 2010).

6

For example, DOD, Quadrennial Defense Review Report, February 2010. DOD, 

Quadrennial Roles and Missions Review Report, January 2009. 
Appendix II: Scope and Methodology

Page 56 GAO-13-470 Defense Workforce

discuss their views on DOD’s implementation of those requirements. We 

compared federal policy concerning the identification of critical functions 

to DOD’s efforts to date, and noted any differences.

To determine how the military departments and defense agencies used 

the inventory of contracted services to inform their fiscal year 2013 and 

2014 budget submissions, we focused our efforts on five DOD 

components—the departments of the Army, Navy, and Air Force, and the 

Defense Logistics Agency (DLA) and Defense Information Systems 

Agency (DISA). We selected these components based on the amount of 

their obligations for contracted services and the large number of 

contractor full time equivalents they identified in their fiscal year 2011 

inventory of contracted services, the most current inventory available at 

the time of our review. We reviewed relevant guidance that directed the 

DOD components on how to use the inventory of contracted services to 

provide contractor FTE information in their budget submissions for fiscal 

years 2013 and 2014. We also interviewed officials from the Office of the 

Under Secretary of Defense for Acquisition, Technology and Logistics, 

Office of Defense Procurement and Acquisition Policy; the Office of the 

Under Secretary of Defense for Personnel and Readiness; and the Office 

of the Under Secretary of Defense (Comptroller) regarding the guidance 

and ongoing initiatives that will impact how the inventory data can be 

used to inform future budget submissions. In addition, we interviewed 

relevant budget and workforce officials from the five components we 

included in our review regarding the use of the inventory in the 

development of their fiscal year 2013 and 2014 budget submissions, and 

we obtained corroborating documentation from the three components that 

could provide it to determine the processes used to develop contractor 

FTE information included in these budget submissions.

We conducted this performance audit from October 2012 to May 2013 in 

accordance with generally accepted government auditing standards. 

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

sufficient, appropriate evidence to provide a reasonable basis for our 

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

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives
Appendix III: Comments from the Department 

of Defense

Page 57 GAO-13-470 Defense Workforce

Appendix III: Comments from the 

Department of Defense
Appendix III: Comments from the Department 

of Defense

Page 58 GAO-13-470 Defense Workforce
Appendix III: Comments from the Department 

of Defense

Page 59 GAO-13-470 Defense Workforce
Appendix IV: GAO Contacts and Staff 

Acknowledgments

Page 60 GAO-13-470 Defense Workforce

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

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

In addition to the contacts named above, Margaret A. Best, Assistant 

Director; Cheryl K. Andrew, Jerome Brown, Katheryn S. Hubbell, LeAnna 

Parkey, Suzanne M. Perkins, Carol D. Petersen, Guisseli Reyes-Turnell, 

Terry L. Richardson, Stephanie J. Santoso, Adam G. Smith, Erik WilkinsMcKee, and Michael Willems made key contributions to this report.

Appendix IV: GAO Contacts and Staff 

Acknowledgments 

GAO Contacts:

Staff 

Acknowledgments:

(351758)
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