Acquisition Workforce: DOD's Efforts to Rebuild Capacity Have Shown Some Progress
Published: 2011-11-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Department of Defense (DOD) is the government's largest buying entity and has recognized that rebuilding the acquisition workforce is a strategic priority. The federal government's current budget and long-term fiscal pressures underscore the importance of a capable and well-functioning workforce. GAO and others have long recognized that the size and capabilities of the workforce across the government warrant the attention of the Congress. This statement discusses (1) DOD's progress in addressing challenges faced in rebuilding the capacity of the acquisition workforce, and (2) insights into the efforts by the Defense Contract Management Agency (DCMA) to rebuild its contract oversight capacity. This statement is drawn from our broad body of work on DOD contract management and acquisition workforce as well as a report issued earlier this month on DCMA's efforts to rebuild capacity. We also obtained updated information from DOD with regard to its acquisition workforce competency assessments and workforce hiring..
section_title: What GAO Found
paragraphs: DOD has made some progress in rebuilding the capacity of the acquisition workforce. For example, DOD reported that it hired about 5,900 civilians into the acquisition workforce in fiscal year 2010 using the Defense Acquisition Development Workforce Fund or as a result of decisions to convert functions previously performed by a contractor to performance by government personnel. DOD's plans for further growing the acquisition workforce remain uncertain because of budget issues. Building workforce skills and expertise is just as important, however, as increasing the size of the acquisition workforce. DOD also made progress in completing competency assessments, which identify the current skills and capabilities of the workforce and help identify areas that needed further management attention. DOD officials reported that DOD has completed three assessments, including contracting, life cycle logistics, and program management, and is drafting final reports for another six assessments. One area where DOD still faces challenges is determining the effectiveness of its training in improving acquisition outcomes. GAO recommended in 2010 that if DOD is to fully assess performance improvements, it needs to go beyond measuring the size of the workforce. DOD did not concur with the recommendation, stating that it believed existing metrics were sufficient to assess the impact of its training efforts on acquisition outcomes. GAO continues to believe DOD needs to develop additional metrics. Further, to help improve acquisition outcomes, GAO reported that DOD needed to assess the skills and competencies of and training provided to those people who have a role in acquisition but who are outside what DOD has formally defined as the acquisition workforce. GAO recommended that DOD establish criteria for identifying these personnel, assess the critical skills needed to perform their role in the acquisition process, and designate an organization that has the responsibility to track DOD's progress in identifying, developing, and overseeing personnel outside the defined acquisition workforce. DOD concurred with these recommendations. The challenges DCMA is experiencing in rebuilding its capacity are illustrative of those faced by DOD. DCMA performs a critical role in helping to manage and oversee contractor performance. GAO's November 2011 report found that DCMA is attempting to rebuild its workforce, making increased use of the Defense Acquisition Workforce Development Fund. For example, in fiscal year 2011, DCMA reported it hired 1,221 new employees under this authority, a substantial increase from 166 hired in fiscal year 2009. GAO also noted that by the late 1990s, DCMA had lost the majority of its contract cost/price analysts, which, according to DCMA, meant many of its pricing-related contract administration responsibilities, such as negotiating forward-pricing rate agreements and establishing final indirect cost rates and billing rates, were no longer performed to the same level of discipline and consistency as in prior years. As a result, DCMA reported that DOD's acquisitions were subjected to unacceptable levels of cost risks. Over the last 2 years, DCMA reports it has hired 279 new contract cost/price analysts and cost monitors (bringing the agency's total number to about 400), extensively using the Defense Acquisition Workforce Development Fund to do so.
section_title: What GAO Recommends
paragraphs: GAO is not making any new recommendations in this statement. GAO has previously made recommendations to DOD to help address DOD's workforce challenges. DOD generally agreed with most of the recommendations and has efforts under way to implement them.

section_title: Letter
paragraphs: I am pleased to be here today to discuss our recent work on acquisition  workforce issues. GAO and others have long recognized that the size and  capabilities of the workforce across the government warrant the attention  of the Congress. The federal government’s current budget and long-term  fiscal pressures underscore the importance of a capable and well- functioning workforce.
Today I would like to focus in particular on the government’s largest  buying entity and discuss our issued work on the challenges facing the  Department of Defense’s (DOD) acquisition workforce. In our February  2011 high-risk report, we noted that among the actions DOD needed to  take to improve outcomes on the hundreds of billions of dollars spent  annually on goods and services was to ensure that its acquisition  workforce was adequately sized, trained, and equipped to meet the  department’s needs. Our work has found that a lack of an adequate  number of trained acquisition and contract oversight personnel  contributed to unmet expectations and has placed DOD, at times, at risk  of potentially paying more than necessary.
Likewise, DOD has recognized that rebuilding its acquisition workforce is  a strategic priority. According to the Office of the Under Secretary of  Defense for Acquisition, Technology, and Logistics (USD/AT&L), to  successfully accomplish the acquisition mission and ensure the best  value for the expenditure of public resources, DOD will place greater  emphasis on having a high-quality workforce with the right competencies  and skill sets. To do so, DOD issued an acquisition workforce plan in April  2010 that identified planned workforce growth in support of the Secretary  of Defense’s strategy to resize and rebalance the acquisition workforce.
My statement today will address DOD acquisition workforce issues from  two perspectives. First, I will provide an overview of DOD’s progress in  addressing challenges faced in rebuilding the capacity of the acquisition  workforce. I will then provide specific insights into the efforts of the  Defense Contract Management Agency (DCMA) to rebuild its contract  oversight capacity. This statement today is drawn from our broad body of  work on DOD contract management and acquisition workforce, including  work reflected in our February 2011 high-risk update as well as our  October 2010 and September 2011 acquisition workforce reports.  Additionally, we relied on our November 2011 report that assessed the  progress and challenges facing DCMA. We also obtained updated  information from DOD with regard to its acquisition workforce competency  assessments and workforce hiring data. This work was prepared in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audits 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.
subsections: section_title: DOD’s Progress in Addressing Challenges in Rebuilding the Capacity of the Acquisition Workforce
paragraphs: DOD has made some progress in rebuilding the capacity of the civilian  acquisition workforce and in completing competency assessments, which  identify the current skills and capabilities of the workforce and help  identify areas that needed further management attention. Included among  the workforce issues facing DOD are (1) determining the right size of the  acquisition workforce, (2) updating acquisition training based on ongoing  competency assessments and measuring the effect of training on  acquisition outcomes, and (3) identifying personnel outside the acquisition  workforce who have a role in acquisition.
subsections: section_title: Steps Taken to Increase the Size of the Acquisition Workforce
paragraphs: In April 2009, the Secretary of Defense announced his intent to increase  the size of the acquisition workforce, in part, to (1) help address concerns  that DOD had become too reliant on contractors to support core functions  and (2) rebuild the capacity and skill sets that had been eroded in the  years that followed the downsizing of the workforce in the 1990s. DOD’s  April 2010 acquisition workforce strategic plan identified an objective of  increasing the civilian acquisition workforce, which totaled about  118,000 civilians as of September 2009, by 20,000 personnel by fiscal  year 2015. This growth would be accomplished both through the hiring of  new personnel using funding provided through the Defense Acquisition  Workforce Development Fund as well as through the “insourcing”—or  conversion to government performance—of functions that were being  performed by contractor personnel. Data provided by the USD/AT&L  indicate that DOD hired about 5,900 individuals using the Defense  Acquisition Workforce Defense Fund as well as through insourcing in  fiscal year 2010.
DOD officials also noted that a combination of other factors, including  hiring by the military departments (excluding those hired using the  Defense Acquisition Workforce Development Fund or that were the result  of an insourcing decision), movement within DOD from one career field to  another, or administrative changes, such as reclassifying existing  positions as being within the acquisition workforce, increased the total  reported number of civilians within the acquisition workforce by about  8,500. Overall, DOD officials reported that the civilian acquisition  workforce was about 133,000 at the end of fiscal year 2010.
The department’s plans for growing the acquisition workforce remain  uncertain. In August 2010, the Secretary of Defense announced that the  insourcing initiative was being halted, though DOD would continue to  insource positions on a case-by-case basis. Further, because of  anticipated future budget constraints, the Secretary of Defense  announced in March 2011 a hiring freeze for DOD’s overall civilian  workforce, but he indicated that the initiatives using the Defense  Acquisition Workforce Development Fund would continue. DOD had  planned to issue an updated strategic workforce plan for the acquisition  workforce earlier this year but has not yet done so, in part, because of the  uncertainty regarding future budgets. DOD officials indicated that the plan  may not be released until April 2012. At this time, we do not know  whether DOD’s updated plan will include information on the funding  needed to achieve its acquisition workforce objectives.
section_title: DOD Efforts to Identify Competencies and Update Acquisition Workforce Training
paragraphs: Just as important as increasing the size of the acquisition workforce is  building workforce skills and expertise. Our work has shown that federal  agencies need to determine the occupations, skills, and competencies  critical to achieving their missions and goals, as well as to identify any  gaps between their current workforce and the workforce they will need in  the future. By taking these steps, agencies would be in a better position  to adjust to changes in technology, budget constraints, and other factors  that alter the environment in which they operate. The DOD acquisition  workforce is no exception.
The Defense Acquisition Workforce Improvement Strategy outlines a  competency assessment strategy for the acquisition workforce as a  means to assess workforce capability using updated and validated  enterprise-wide models, data and information. In September 2010 we  reported DOD had completed only one of its planned 13 assessments.  Over the past year, however, DOD has reported making progress in  completing some of the remaining 12 assessments. For example,  according to the Deputy Director of AT&L human capital initiatives, DOD  has completed two additional competency assessments. Thus,  competency assessments have now been completed in the areas of  contracting, life-cycle logistics, and program management. DOD is  drafting the final report for another six competency assessments.
DOD officials have reported that they have used these competency  assessments, in part, to help revise the training curriculum for its  contracting career field. DOD’s contracting competency assessment  found that there was inconsistency in fundamental contracting skills and  in the source selection process and that more advanced training on  pricing was needed. In March 2011, the Office of Defense Procurement  and Acquisition Policy announced plans to revise the training standards  for its contracting career field, effective October 1, 2011. According to  DOD, the changes in the curriculum incorporated more emphasis on  pricing, services contracting, and competition, among other things, and  were based on the competency assessments and discussions with senior  procurement executives and contracting leaders. Similarly, in August  2011 DOD noted plans to make changes in its purchasing and  industrial/contract property management curricula.
One area where DOD still faces challenges is determining the  effectiveness of its training in improving acquisition outcomes. We  reported in 2010 that if DOD is to fully assess performance  improvements, it needs to go beyond measuring the size of the  workforce. We recommended that DOD establish milestones for the  development of metrics to measure how acquisition certification training  improves the proficiency and capability of the acquisition workforce, in  order to demonstrate and track how training efforts contribute to improved  acquisition workforce performance. DOD did not concur with the  recommendation stating that it believed existing metrics were sufficient to  assess the effect of its training efforts on acquisition outcomes. We  continue to believe DOD needs to develop additional metrics.
section_title: DOD Needs to Look Beyond the Formally Defined Acquisition Workforce
paragraphs: To help improve acquisition outcomes, our September 2011 report noted  that DOD needed to assess the skills and competencies of and training  provided to those people outside what DOD has defined as the  acquisition workforce. These people include those who may set  requirements or serve as the contracting officer’s representatives to help  manage and oversee contractor performance—functions that are key to  acquisition outcomes. GAO found that personnel with acquisition-related  responsibilities represented more than half of the 430 personnel involved  with 29 services acquisition contracts reviewed. In this report, we also  noted that several organizations have been tracking and managing the  acquisition workforce, but no DOD organization has (1) systematically  identified personnel outside of what has been defined as the acquisition  workforce and the related competencies, or (2) been given responsibility  for the identification, development and oversight of this group. DOD is not  required to identify personnel outside the acquisition workforce and has  not established a process to do so. As DOD officials noted, identifying this  population is challenging, in part because it is a transient one dispersed  across many DOD organizations. Additionally, these people come from a  variety of career fields and are often involved in acquisitions as a  secondary duty. DOD has taken action to identify part of this population— such as requirements personnel for major weapon systems—but has not  done this for all personnel with acquisition-related responsibilities outside  the acquisition workforce. We also found that DOD has limited information  to gauge the current and future demand for training this population or the  effectiveness of the current training that is available. We recommended  that DOD establish criteria for identifying these personnel, assess the  critical skills needed to perform their roles in the acquisition process, and  designate an organization that has the responsibility to track DOD’s  progress in identifying, developing, and overseeing personnel outside the  defined acquisition workforce. DOD concurred with the recommendations.
section_title: Rebuilding DCMA’s Capacity
paragraphs: The challenges DCMA is experiencing in rebuilding its capacity is  illustrative of those faced by DOD. DCMA performs a critical role in  helping to manage and oversee contractor performance. Specifically, it  has responsibilities for providing contract administration services for  DOD’s buying activities and working directly with defense contractors to  help ensure that goods and services are delivered on time, at projected  cost, and meet performance requirements. In addition, as a designated  combat support agency, DCMA is tasked with providing contract  administration and support to combatant commanders during contingency  operations. The preponderance of DCMA’s workforce is included in the  defined acquisition workforce.
In November 2011, we reported on how DCMA is positioning itself to  meet its missions. We noted that DCMA has undergone an evolution to  become the agency it is today. For example, DCMA’s workforce  decreased from an estimate of about 24,000 in 1990 to a low of about  9,300 in 2008. While senior DCMA officials said the workforce’s  downsizing made sense for much of the 1990s, because there were  efficiencies to be gained and its workload was generally decreasing, this  changed in the early 2000s, when DCMA’s workload started to increase,  but its workforce numbers continued to decline. As the workforce  declined, however, the agency experienced significant erosion of  expertise, such that it could not fulfill all of its oversight functions.
Since 2008, DCMA has been rebuilding its workforce, and to do so, has  made increasing use of the Defense Acquisition Workforce Development  Fund. For example, in fiscal year 2011, DCMA reported it hired 1,221 new  employees under this authority, a substantial increase from 166 hired in  fiscal year 2009. These new employees include 3-year interns as well as  journeymen, described by DCMA officials as individuals with extensive  experience in a certain business area. Some contract management office  leaders told us, however, they were not sure that they would have enough  operations and maintenance-funded positions available to be able to  retain the journeymen and interns they had originally hired using the  Defense Acquisition Workforce Development Fund. DCMA leadership  noted that the agency is requesting increased operations and  maintenance funding to convert these positions in the future.
As noted earlier, building workforce skills and expertise is just as  important as increasing the size of the acquisition workforce. Our  November 2011 report noted that by the late 1990s, DCMA had lost the  majority of its contract cost/price analysts, which, according to DCMA,  meant many of its pricing-related contract administration responsibilities,  such as negotiating forward pricing rate agreements and establishing final  indirect cost rates and billing rates, were no longer performed to the same  level of discipline and consistency as in prior years. As a result, DCMA  reported that DOD’s acquisitions were subjected to unacceptable levels of  cost risks. In one recent example, a DCMA official told us about a case  where an administrative contracting officer, lacking support from contract  cost/price analysts had, for simplicity, incorrectly blended a contractor’s  overhead rates rather than deriving separate rates for different areas  (e.g., general and administrative, and manufacturing).
Over the last 2 years, DCMA reports it has hired 279 new contract  cost/price analysts and cost monitors (bringing the agency’s total number  to about 400), extensively using the Defense Acquisition Workforce  Development Fund to do so. Further, in 2009, DCMA created the Cost  and Pricing Center, with a mission of developing and sustaining the  agency’s expertise in pricing. DCMA officials said the center has helped  to hire contract cost/price analysts for its contract management offices. It  also develops and conducts training for the growing DCMA contract  cost/price analyst workforce.
DCMA also identified ongoing concerns with its ability to effectively carry  out its quality assurance responsibilities because of workforce size and  capability shortfalls, increasing the risk to the warfighter and the  taxpayers. For example, DCMA reported an increase in customer  complaints in the form of reported quality deficiencies in products. One  action DCMA reports it is taking to address the issues related to its quality  assurance capabilities is defining certification training for its quality  assurance personnel. DCMA also reports it is moving toward  standardizing position descriptions as a way to establish consistent  expectations for its quality assurance workforce. DCMA has emphasized  increasing the number of quality assurance personnel and estimates this  will continue through 2016.
Even with DCMA’s recent efforts to rebuild workforce capacity, the large  percentage of retirement-eligible employees presents challenges. Over  half of DCMA’s workforce is retirement eligible or qualified for early  retirement incentives. For example, as of the end of fiscal year 2010,  about 24 percent of the DCMA workforce was eligible to retire, and an  additional 28 percent qualified for early retirement incentives. The large  number of retirement- eligible employees continues to make DCMA  vulnerable to the loss of valuable technical expertise and organizational  knowledge. In part, DCMA plans to mitigate this risk through aggressive  recruiting and knowledge management activities, such as bringing back  retired annuitants to help raise the skill levels of the newer employees.
section_title: Concluding Observations
paragraphs: In conclusion, Mr. Chairman, DOD has focused much needed attention to  rebuild its acquisition workforce and has made some progress in terms of  growing the workforce, identifying the skills and competencies it needs,  and using such information to help update its training curriculum. More  needs to be done, however, especially for those individuals who do not fit  within the traditional definition of DOD’s acquisition workforce. The fiscal  and budget challenges facing this nation and DOD underscore the need  for DOD to strategically manage its workforce to ensure that they have  the right skills, capabilities, and training to effectively acquire and manage  the billions of dollars DOD spends on goods and services each year.  These same fiscal and budget pressures may present DOD with  additional challenges in meeting its acquisition workforce goals. Whether  DOD achieves all of its previously planned growth and related workforce  improvement initiatives remains uncertain, but what is certain is the  department can ill-afford not to succeed in preparing its workforce to meet  its future needs.
Chairman Lankford, Ranking Member Connolly, and members of the  Subcommittee, this concludes my prepared statement. I would be happy  to respond to any questions you may have at this time.
section_title: Contacts and Acknowledgment
paragraphs: For further information about this statement, please contact me at (202)  512-4841 or huttonj@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this statement. Individuals who made key contributions to this  statement include Penny Berrier, Assistant Director; Timothy DiNapoli;  Laura Holliday; Victoria Klepacz; John Krump; and Janet McKelvey.
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