As part of Congress’ efforts to improve the availability of information on and management of services acquisitions, it enacted Section 801 of the National Defense Authorization Act for Fiscal Year 2002, which required the Secretary of Defense to establish a data-collection system to provide management information with regard to each purchase of services by a military department or defense agency. For example, the information to be provided includes the services purchased, the total dollar amount of the purchase, and the extent of competition provided in making the purchase, among other things. In 2008, Congress amended this provision in section 807 of the National Defense Authorization Act for Fiscal Year 2008 to add a requirement for the Secretary of Defense to submit an annual inventory of the activities performed pursuant to contracts for services for or on behalf of DOD during the preceding fiscal year. The inventory is to include a number of specific data elements for each identified activity, including the function and missions performed by the contractor; the contracting organization, the component of DOD administering the contract, and the organization whose requirements are being met through contractor performance of the function; the funding source for the contract by appropriation and operating agency; the fiscal year the activity first appeared on an inventory; the number of full-time contractor employees (or its equivalent) paid for performance of the activity; a determination of whether the contract pursuant to which the activity is performed is a personal services contract; and a summary of the information required to be collected for the activity under 10 U.S.C. § 2330a(a). As indicated in AT&L’s May 2010 guidance, DOD components are to compile an inventory of activities performed on their behalf by contractors and submit it to AT&L, which formally submits a consolidated DOD inventory to Congress. Once compiled, the inventory is to be made public and, within 90 days of the date on which the inventory is submitted to Congress, the Secretary of the military department or head of the defense agency responsible for activities in the inventory is to review the contracts and activities for which they are responsible and ensure that any personal services contract included in the inventory was properly entered into and is being performed appropriately; that the activities in the inventory do not include inherently governmental functions; and to the maximum extent practicable, activities on the list do not include any functions closely associated with inherently governmental functions. In addition, the Secretary of the military department or head of the defense agency is to identify activities that should be considered for conversion to performance by civilian employees pursuant to 10 U.S.C. § 2463 or to an acquisition approach that would be more advantageous to the department. Congress added Section 2463 to title 10 of the U.S. Code in the National Defense Authorization Act for Fiscal Year 2008. This section required the Under Secretary of Defense for Personnel and Readiness to develop guidelines and procedures to ensure that consideration is given to using DOD civilian employees to perform new functions and functions that are currently performed by contractors and could be performed by DOD civilian employees. In particular, these guidelines and procedures are to provide special consideration for, among other instances, in-sourcing functions closely associated with inherently governmental functions that are currently being performed by contractors, or new requirements that may be closely associated with inherently governmental functions. Congress required the Secretary of Defense to make use of the inventories created under 10 U.S.C. § 2330a(c) for the purpose of identifying functions that should be considered for performance by DOD civilian employees under this provision. DOD issued initial in-sourcing guidance in April 2008 and additional guidance in May 2009 to assist DOD components in implementing this legislative requirement. The National Defense Authorization Act for Fiscal Year 2010 provided for a new section 115b in title 10 of the U.S. Code that requires DOD to annually submit to the defense committees a strategic workforce plan to shape and improve the civilian workforce. Among other requirements, the plan is to include an assessment of the appropriate mix of military, civilian, and contractor personnel capabilities. The Office of the Under Secretary of Defense for Personnel and Readiness is responsible for developing and implementing the strategic plan in consultation with AT&L. Finally, Section 803 of the National Defense Authorization Act for Fiscal Year 2010 requires the Secretary of Defense to include information in DOD’s annual budget justification materials related to the procurement of contract services. Specifically, the legislation requires, for each budget account, to clearly and separately identify (1) the amount requested for the procurement of contract services for each DOD component, installation, or activity, and (2) the number of contractor FTEs projected and justified for each DOD component, installation, or activity based on the inventory and associated reviews. Collectively, these statutory requirements indicate that the inventory and the associated review process are to serve as a basis for identifying candidates for in-sourcing contracted services, supporting development of DOD’s annual strategic workforce plan, and specifying the number of contractor FTEs included in DOD’s annual budget justification materials. Figure 1 below illustrates the relationship between the related statutory requirements. Amount requested for contract services and number of contractor FTEs projected and justified for each budget account, by component, installation, or activity DOD initially planned to use a phased approach to implement the inventory requirement, relying first on submission in October 2008 of a prototype inventory covering activities performed for the Army pursuant to contracted services for fiscal year 2007, and gradually producing inventories for the remaining military departments and defense agencies over subsequent years. The Army served as the prototype as it had started collecting information in 2005 to obtain better visibility of its contractor workforce. To do so, the Army developed its Contractor Manpower Reporting Application (CMRA), a system that is designed to collect information on labor-hour expenditures by function, funding source, and mission supported on contracted efforts. In response to direction from Congress, DOD revised its implementation schedule and in July and September 2009 submitted inventories covering the fiscal year 2008 service contracting activities of the military departments and 13 other defense agencies. For fiscal year 2009, inventories were submitted by the military departments, as well as a larger group of other defense agencies, 17 in total, as well as the U.S. Special Operations Command and the U.S. Transportation Command. DOD officials noted that the components submitting inventories are those components with acquisition authority. AT&L implemented a more uniform approach for compiling the fiscal year 2009 inventories compared with fiscal year 2008, and the changes in the approach affected both the reported spending on service contracts and the number of contractor FTEs. For example, changes in the categories of services included in the inventories influenced the Air Force’s reported increase and the Navy’s reported decrease in spending on services in fiscal year 2009. Similarly, the use of a new formula based on AT&L guidance for estimating contractor FTEs reduced the number of contractor FTEs the Navy and Air Force would have reported had they used the formulas each used for their fiscal year 2008 inventories. AT&L’s guidance also authorized the Army to continue using its existing process, which incorporates data reported by contractors through the Army’s CMRA system, as the basis for its inventory. Army officials attributed the reported increases in spending and number of contractor FTEs in the Army’s inventory to better reporting in the CMRA system in fiscal year 2009. DOD and military department officials identified continuing limitations associated with the fiscal year 2009 inventories, including the inability of FPDS-NG, which was to be used by DOD components other than the Army, to provide information for all of the required data elements. Similarly, Army officials we spoke with expressed some concerns with the process used to ensure the accuracy of data reported in CMRA. AT&L characterized its May 2010 guidance as an interim measure for circumstances in which actual contractor manpower data have not been collected. The department has stated that it plans to move towards collecting such data from contractors as the basis for future inventories, but it has not issued guidance or a plan of action for doing so. In May 2010, AT&L issued guidance that provided more uniform direction to be used by DOD components other than the Army to compile their fiscal year 2009 inventories, while allowing the Army to continue using its existing process that reports manpower data collected directly from its contractors. AT&L noted that the move towards a more uniform approach in fiscal year 2009 was meant to reduce inconsistencies that resulted from DOD components using different approaches in fiscal year 2008 and was an interim measure for circumstances in which actual contractor manpower data have not been collected. AT&L’s guidance for fiscal year 2009 standardized the process for compiling the inventories for most DOD components by defining the categories of services to be included in the inventories, the data sources to be used to populate the required data elements, and the method to estimate the number of contractor FTEs. For example, the guidance indicated that all categories of services identified in FPDS-NG were to be included in the fiscal year 2009 inventories, with the exception of those associated with the early stages of research and development, lease and rental of facilities and equipment, and construction. By contrast, for the fiscal year 2008 inventories, the Air Force did not include any research and development services, while the Navy had included all stages of research and development services. Further, the guidance required that FPDS-NG be used as the source for the majority of the inventory’s data elements, such as the service purchased, the total dollar amount of the purchase, the organization whose requirements are being met by contracted performance, and the function and mission being performed by the contract. DPAP officials noted that as DOD currently lacks a single data source that contains information for all the data elements required in the inventories, DOD determined that FPDS- NG provided the most readily available data departmentwide, though it acknowledged that there were limitations in using FPDS-NG to meet the inventory requirements.