At the end of fiscal year 2008, the number of civilian and military personnel in DOD’s acquisition workforce totaled nearly 126,000—of which civilian personnel comprised 88 percent. DOD defines its acquisition workforce to include 13 career fields, based on the Defense Acquisition Workforce Improvement Act of 1990. From fiscal years 2001 to 2008, the number of civilian and military acquisition personnel in these 13 fields declined overall by 2.6 percent; however, some career fields have increased substantially—test and evaluation—while others have shown dramatic declines—business, cost estimating and financial management.. See appendix I for the number of military and civilian personnel in each of the acquisition career fields in fiscal years 2001 and 2008, and the percentage change between those years. Our prior work has shown that DOD has relied heavily on contractor personnel to augment its in-house workforce. In March 2008, we reported that in 15 of the 21 offices we reviewed, contractor personnel outnumbered DOD personnel and comprised as much as 88 percent of the workforce. In the other 6 offices, contractor personnel comprised between 19 and 46 percent of the workforce. Although this review did not focus on the acquisition workforce, many of the 21 offices had acquisition responsibilities. While use of contractors provides the government certain benefits, such as increased flexibility in fulfilling immediate needs, we and others have raised concerns about the federal government’s services contracting, in particular for professional and management support services, including acquisition support services. In March 2008, we noted concern about one DOD component’s hiring contractor personnel in reaction to a shortfall in the government workforce rather than as a planned strategy to help achieve its mission. In our case study, we found that one Army component was paying between 17 and 27 percent more on average for contractor personnel working as contract specialists than for its government employees who were doing equivalent work. In addition to the risk of paying more than necessary for the work that it needs, is the risk of loss of government control over and accountability for mission-related policy and program decisions when contractors provide services that closely support inherently governmental functions, which require discretion in applying government authority or value judgments in making decisions for the government. The closer contractor services come to supporting inherently governmental functions, the greater the risk of their influencing the government’s control over and accountability for decisions that may be based, in part, on contractor work. Other concerns about using contractor personnel include improper use of personal services contracts and the increased potential for conflicts of interest, both organizational and personal. Numerous components in DOD share policy and guidance responsibility for the workforce. Among the components, the Office of the Under Secretary for Acquisition, Technology and Logistics (AT&L), is responsible for managing DOD’s acquisition workforce, including tailoring policies and guidance specific to the acquisition workforce and managing the training and certification of that workforce. In addition, each military service has its own corresponding acquisition offices that develop additional service- specific guidance, and provide management and oversight of its workforce. Within each service, the program offices identify acquisition workforce needs, make decisions regarding the composition of the workforce (the mix of civilian, military, and contractor personnel), and provide the day-to-day management of the workforce. DOD lacks critical departmentwide information on the use and skill sets of contractor personnel performing acquisition-related functions. While DOD planning documents state that the workforce should be managed from a “total force” perspective—which calls for contractor personnel to be managed along with civilian and military personnel —DOD has only recently collected departmentwide data on contractor personnel performing acquisition-related functions. According to an AT&L official, DOD’s baseline count shows that 52,000 contractor personnel are supporting the acquisition workforce. As such, contractor personnel comprise about 29 percent of DOD’s total acquisition workforce. The AT&L official noted that the contractor personnel tracking system is still under development. Data we obtained from 66 program offices show that contractor personnel comprised more than a third of those programs’ acquisition-related positions. Table 1 shows the data on contractor personnel reported by the 66 program offices (see appendix II for more detailed information). DOD also lacks information on factors driving program offices’ decisions to use contractor personnel rather than hire in-house personnel. DOD guidance for determining the workforce mix outlines the basis on which officials should make decisions regarding what type of personnel— military, civilian, or contractor—should fill a given position. The guidance’s primary emphasis is on whether the work is considered to be an inherently governmental function, not on whether it is a function that is needed to ensure institutional capacity. The guidance also states that using the least costly alternative should be an important factor when determining the workforce mix. However, when we asked program offices about their reasons for using contractor rather than civilian personnel, we found that cost was cited by only 1 program office. The 30 program offices, which provided reasons for using contractor personnel, cited the following key factors: 22 cited a shortage of civilian personnel with a particular expertise, 18 cited staffing limits on civilian personnel, 17 cited that the particular expertise sought is generally not hired by the government, 15 cited the ease or speed of bringing on contractor personnel, 9 cited having a short-term requirement, 8 cited funding not being available for civilian personnel, and 1 cited the cost of contractor personnel being less than civilian personnel (See appendix III for information on the number of program offices reporting the reasons for using contractor personnel by component.) In comparison with DOD’s practices, we found that leading organizations maintain and analyze data on their contractor personnel in order to mitigate risks, ensure compliance with in-house regulations and security requirements, and ensure that reliance on contractor personnel creates value for the company. We also found that leading organizations take a business-oriented approach to determining when to use contractor support. For example, some companies generally use contractor personnel to facilitate flexibility and meet peak work demands without hiring additional, permanent, full-time employees. Some also place limits on their use of contractor personnel, such as limiting the use of contractor personnel to temporary support, to 1 year of operations, or to functions that are not considered as core pieces of the company’s main business. AT&L lacks key pieces of information that hinder its ability to determine gaps in the number and skill sets of acquisition personnel needed to meet DOD’s current and future missions. At a fundamental level, workforce gaps are determined by comparing the number and skill sets of the personnel that an organization has with what it needs. However, AT&L lacks information on both what it has and what it needs. Not having this information in its assessments not only skews analyses of workforce gaps, but also limits DOD’s ability to make informed workforce allocation decisions. With regard to information on the personnel it has, AT&L lacks complete information on the skill sets of the current acquisition workforce— including contractor personnel—and whether these skill sets are sufficient to accomplish its missions. AT&L is currently conducting a competency assessment to identify the skill sets of its current in-house acquisition workforce. While this assessment will provide useful information regarding the skill sets of the current in-house acquisition workforce, it is not designed to determine the size, composition, and skill sets of an acquisition workforce needed to meet the department’s missions. AT&L also lacks complete information on the acquisition workforce needed to meet DOD’s mission. The personnel numbers that AT&L uses to reflect needs are derived from the budget. Because these personnel numbers are constrained by the size of the budget, they likely do not reflect the full needs of acquisition programs. Of the 66 program offices that provided data to us, 13 reported that their authorized personnel levels were lower than those they requested. In comparison with DOD’s practices, we found that leading organizations identify gaps in the workforce by assessing the competencies of its workforce and comparing those with the overall competencies the organization needs to achieve its objectives. An official from one company noted that such an assessment indicated that the company needed skill sets different from those it needed in the past, because the work in one of its lines of service had increased. AT&L has begun to respond to recent legislative requirements aimed at improving DOD’s management and oversight of its acquisition workforce, including developing data, tools, and processes to more fully assess and monitor its acquisition workforce. Some of AT&L’s recent initiatives include: Drafting an addendum to the Implementation Report for the DOD Civilian Human Capital Strategic Plan 2006-2010 that will lay out AT&L’s vision and key initiatives for managing and overseeing the acquisition workforce and an analysis of the status of the acquisition workforce. Implementing the Acquisition Workforce Development Fund, with efforts focused in three key areas: (1) recruiting and hiring, (2) training and development, and (3) retention and recognition. The largest proportion of the fund is currently slated for recruiting and hiring. Developing a competency assessment for the acquisition workforce, which is scheduled to be completed in March 2010. Establishing the Defense Acquisition Workforce Joint Assessment Team. According to an AT&L official, the team will now focus its efforts on identifying, tracking, and reporting information on contractor personnel supporting the acquisition workforce—including developing a common definition to be used across the department. The Secretary of Defense recently announced that efforts will begin in fiscal year 2010 to increase the size of the acquisition workforce by converting 11,000 contractor personnel to government positions and hiring an additional 9,000 government personnel by 2015. According to an AT&L official, AT&L is working with the components to develop the plans for these efforts. In addition to these acquisition workforce initiatives, another DOD initiatives aimed at improving the broader workforce may have the potential to enhance AT&L’s efforts to obtain information on the skill sets of contractor personnel supporting the acquisition workforce. Specifically, DOD, through its components, is developing an annual inventory of contracts for services. The inventory is required to include, among other things, information identifying the missions and functions performed by contractors, the number of full-time contractor personnel equivalents, and the funding source for the contracted work. The Army issued its first inventory for fiscal year 2007. This initial inventory, however, does not include information on the skill sets of contractor personnel and the functions they perform. Inventories for all DOD components are not scheduled to be completed before June 2011. Although these efforts are promising, it is too early to determine the extent to which these efforts will improve the department’s management and oversight. Moreover, these efforts may not provide the comprehensive information DOD needs to manage and oversee its acquisition workforce. DOD faces significant challenges in assessing and overseeing its acquisition workforce to ensure that it has the capacity to acquire needed goods and services and monitor the work of contractors. While DOD’s recent and planned actions could help address many of these challenges, the department has yet to determine the acquisition workforce that it needs or develop comprehensive information about contractor personnel—including the skill sets, functions performed, or length of time for which they are used. In addition, without guidance on the appropriate circumstances under which contractor personnel may perform acquisition work, DOD runs the risk of not maintaining sufficient institutional capacity to perform its missions, paying more than necessary for the work that it needs, or losing control over and accountability for mission-related policy and program decisions. Until DOD maintains more comprehensive information on its contractor personnel, it will continue to have insufficient information regarding the range of skills and the functions performed by this key component of the acquisition workforce. Without having this information on a departmentwide basis, DOD runs the risk of not having the right number and appropriate mix of civilian, military, and contractor personnel it needs to accomplish its missions. In our report released March 25, 2009, we made several recommendations to the Secretary of Defense to better ensure that DOD’s acquisition workforce is the right size with the right skills and that the department is making the best use of its resources. We recommended that the Secretary: Collect and track data on contractor personnel who supplement the acquisition workforce—including their functions performed, skill sets, and length of service—and conduct analyses using these data to inform acquisition workforce decisions. Identify and update on an ongoing basis the number and skill sets of the total acquisition workforce that the department needs to fulfill its mission. Review and revise the criteria and guidance for using contractor personnel to clarify under what circumstances and the extent to which it is appropriate to use contractor personnel to perform acquisition- related functions. Develop a tracking mechanism to collect information on the reasons contractor personnel are being used so that DOD can determine whether the guidance has been appropriately implemented across the department. We are pleased that DOD has implemented part of the first recommendation by collecting departmentwide data on the number of contractor personnel that support the acquisition workforce. We are encouraged by DOD generally concurring with the rest of our recommendations, although the department noted that collecting information on the skill sets and length of service of contractor personnel needed to be carefully considered. We agree that the manner in which data on contractor personnel are to be collected should continue to be carefully considered. Nevertheless, we continue to believe that comprehensive data on contractor personnel are needed to accurately identify the department’s acquisition workforce gaps and inform its decisions on the appropriate mix of in-house or contractor personnel. As DOD moves forward with it’s recently announced plans to increase the size of the acquisition workforce over the next few years, having comprehensive information about the acquisition workforce it both has and needs will become even more vital to ensure the department makes the most effective workforce decisions. Mister Chairman, this concludes my prepared remarks. I would be happy to answer any questions you or other Members of the Subcommittee may have at this time. Military, Civilian, and Contractor Personnel in Acquisition-Related Functions by Service as Reported by Selected Program Offices in 2008 Air Force (19 program offices) offices) offices) Joint services (9 program offices) offices) offices) Business (includes auditing, business, cost estimating, financial management, property management, and purchasing) Engineering and Technical (includes systems planning, research, development and engineering; lifecycle logistics; test and evaluation; production, quality and manufacturing; and facilities engineering) FFRDC personnel work in Federally Funded Research and Development Centers. Number of Program Offices Reporting Reason for Using Contracor Personnel as Reported by Selected Program Offices in 2008 Navy and Marine Corps (5 program offices) offices) offices) Joint services (4 program offices) offices) John K. Needham, (202) 512-5274 or needhamjk1@gao.gov In addition to the contact named above, Carol Dawn Petersen, Assistant Director, and Ruth “Eli” DeVan, Analyst-in-Charge, made key contributions to this report. Department of Defense: Additional Actions and Data Are Needed to Effectively Manage and Oversee DOD’s Acquisition Workforce. GAO-09-342. Washington, D.C.: March 25, 2009. Human Capital: Opportunities Exist to Build on Recent Progress to Strengthen DOD’s Civilian Human Capital Strategic Plan. GAO-09-235. Washington, D.C.: February 10, 2009. High Risk Series: An Update. GAO-09-271. Washington, D.C.: January 2009. Department of Homeland Security: A Strategic Approach Is Needed to Better Ensure the Acquisition Workforce Can Meet Mission Needs. GAO-09-30. Washington, D.C.: November 19, 2008. Human Capital: Transforming Federal Recruiting and Hiring Efforts. GAO-08-762T. Washington, D.C.: May 8, 2008. Defense Contracting: Army Case Study Delineates Concerns with Use of Contractors as Contract Specialists. GAO-08-360. Washington, D.C.: March 26, 2008. Defense Management: DOD Needs to Reexamine Its Extensive Reliance on Contractors and Continue to Improve Management and Oversight. GAO-08-572T. Washington, D.C.: March 11, 2008. Defense Contracting: Additional Personal Conflict of Interest Safeguards Needed for Certain DOD Contractor Employees. GAO-08-169. Washington, D.C.: March 7, 2008. Federal Acquisition: Oversight Plan Needed to Help Implement Acquisition Advisory Panel’s Recommendations. GAO-08-515T. Washington, D.C.: February 27, 2008. The Department of Defense’s Civilian Human Capital Strategic Plan Does Not Meet Most Statutory Requirements. GAO-08-439R. Washington, D.C.: February 6, 2008. Defense Acquisitions: DOD’s Increased Reliance on Service Contractors Exacerbates Long-standing Challenges. GAO-08-621T. Washington, D.C.: January 23, 2008. Department of Homeland Security: Improved Assessment and Oversight Needed to Manage Risk of Contracting for Selected Services. GAO-07-990. Washington, D.C.: September 17, 2007. Federal Acquisitions and Contracting: Systemic Challenges Need Attention. GAO-07-1098T. Washington, D.C.: July 17, 2007. Defense Acquisitions: Improved Management and Oversight Needed to Better Control DOD’s Acquisition of Services. GAO-07-832T. Washington, D.C.: May 10, 2007. Highlights of a GAO Forum: Federal Acquisition Challenges and Opportunities in the 21st Century. GAO-07-45SP. Washington, D.C.: October 2006. Framework for Assessing the Acquisition Function At Federal Agencies. GAO-05-218G. Washington, D.C.: September 2005. A Model of Strategic Human Capital Management. GAO-02-373SP. Washington, D.C.: March 15, 2002. This is a work of the U.S. government and is not subject to copyright protection in the United States. 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Summary: Since 2001, Department of Defense's (DOD) spending on goods and services has more than doubled to $388 billion in 2008, while the number of civilian and military acquisition personnel has remained relatively stable. To supplement its in-house workforce, DOD relies heavily on contractor personnel. If it does not maintain an adequate workforce, DOD places its billion-dollar acquisitions at an increased risk of poor outcomes and vulnerability to fraud, waste, and abuse. This testimony is based on GAO's March 2009 report and addresses DOD's efforts to assess the sufficiency of the total acquisition workforce and to improve its management and oversight of that workforce. It also discusses selected practices of leading organizations that may provide DOD with insights for its efforts. Although contractor personnel are a key segment of its total acquisition workforce, DOD lacks critical departmentwide information on the use and skill sets of these personnel. DOD also lacks information on why contractor personnel are used, which limits its ability to determine whether decisions to use contractors to supplement the in-house acquisition workforce are appropriate. GAO found that program office decisions to use contractor personnel are often driven by factors such as quicker hiring time frames and civilian staffing limits, rather than by the nature or criticality of the work. In comparison with DOD's practices, leading organizations maintain and analyze data on their contractor personnel and take a business-oriented approach to determining when to use contractor support. DOD also lacks key pieces of information that limit its ability to determine gaps in the acquisition workforce it needs to meet its missions. In addition to lacking information on contractor personnel, DOD lacks complete information on the skill sets of its in-house personnel. DOD also lacks information on the acquisition workforce it needs to meet its mission. Not having this information not only skews analyses of workforce gaps, but also limits DOD's ability to make informed workforce allocation decisions and determine whether the total acquisition workforce--in-house and contractor personnel--is sufficient to accomplish its mission. In comparison with DOD's practices, leading organizations identify gaps in the workforce by assessing the competencies of their workforces and comparing those with the overall competencies the organization needs to achieve its objectives. DOD recently initiated several efforts aimed at improving the management and oversight of its acquisition workforce, such as plans for overseeing additional hiring, recruiting, and retention activities. DOD is also planning to increase its in-house acquisition workforce by converting 11,000 contractor personnel to government positions and hiring an additional 9,000 government personnel by 2015. The success of DOD's efforts to improve the management and oversight of its acquisition workforce, however, may be limited without comprehensive information on the acquisition workforce it has and needs.