Over the last two decades, contractors have played a critical role in U.S. military operations, making up more than half of Department of Defense's (DOD) total workforce in Iraq, Afghanistan, and the Balkans. With the end of combat operations in Iraq and the drawdown of forces in Afghanistan, DOD is turning its attention to preparing for future military operations. As reflected in recent defense strategic planning guidance, the United States must prepare for a diverse range of security challenges. Although future contingency operations may differ from those of the past decade, many analysts and defense officials believe that contractors will continue to play a central role in military operations. These observers believe that, in order to meet the challenges of future operations, DOD should be prepared to effectively award and manage contracts at a moment's notice, anywhere in the world, in unknown environments, and on a scale that may exceed the total contract obligations of any other federal agency. This report provides background information and identifies issues for Congress on the use of contractors to support military operations. DOD's extensive use of contractors poses several potential policy and oversight issues for Congress and has been the focus of numerous hearings. Congress' decisions on these issues could substantially affect the extent to which DOD relies on contractors in and is capable of planning for and overseeing contractors in future operations. Related CRS reports include CRS Report R42084, Wartime Contracting in Afghanistan: Analysis and Issues for Congress , by [author name scrubbed], which focuses on the challenges of contract support in Afghanistan, and CRS Report R41820, Department of Defense Trends in Overseas Contract Obligations , by [author name scrubbed] and [author name scrubbed], which focuses on trends in DOD contract obligations around the world. DOD has long relied on contractors to support overseas military operations. Post-Cold War defense budget reductions resulted in significant cuts to military logistics and other support capabilities, requiring DOD to hire contractors to "fill the gap." Recent operations in Iraq and Afghanistan, and before that in the Balkans, have reflected this increased reliance on contractors supporting U.S. troops—both in terms of the number of contractors and the type of work being performed. According to DOD data, contractors, on average, represented just over half of the force in the Balkans, Afghanistan, and Iraq (see Figure 1 ). Source: Balkans: Congressional Budget Office. Contractors' Support of U.S. Operations in Iraq. August 2008. p. 13; Afghanistan: CRS analysis of DOD data, calculated as an average for the period September 2007–March 2013; Iraq: CRS analysis of DOD data, calculated as an average for the period September 2007–March 2011. Note: DOD did not begin releasing data on contractors in U.S. Central Command until the second half of 2007. As of March 2013, there were approximately 108,000 DOD contractor personnel in Afghanistan, representing 62% of the total force (see Appendix A ). Of this total, there were nearly 18,000 private security contractors, compared to 65,700 U.S. troops. Over the last six fiscal years, DOD obligations for contracts performed in the Iraq and Afghanistan areas of operation were approximately $160 billion and exceeded total contract obligations of any other U.S. federal agency (see Appendix B ). According to government officials and analysts, the military is unable to effectively execute many operations, particularly those that are large-scale and long-term in nature, without extensive operational contract support. Even in short-term operations, contractors can play a variety of critical roles. For example, the first fragmentary order for Operation Tomodachi —DOD's response to the earthquake and tsunami that struck Japan in 2011—involved contract support. Given the extensive role of contractors in military operations, many DOD officials and analysts consider contract management a mission-essential task. DOD has recognized the role contractors are likely to play in future operations. As stated in its Budget Request for FY2013, operational contract support is a critical function in support of military operations, natural disasters, and unanticipated calamities. Contractors can provide significant operational benefits to DOD, including freeing up uniformed personnel to conduct combat operations; providing expertise in specialized fields, such as linguistics or weapon systems maintenance; and providing a surge capability, quickly delivering critical support capabilities tailored to specific military needs. Contractors are often responsible for such critical tasks as providing armed security to convoys and installations, providing life support to forward deployed warfighters, conducting intelligence analysis, and training local security forces. Because contractors can be hired when a particular need arises and released when their services are no longer needed, contractors can be less expensive in the long run than maintaining a permanent in-house capability. And when a decision is made to limit the number of troops on the ground, contractors can fulfill critical manpower needs. Just as the effective use of contractors can augment military capabilities, the ineffective use of contractors can prevent troops from receiving what they need, when they need it, and can lead to the wasteful spending of billions of dollars—dollars that could have been used to fund other operational requirements. Contractors can also compromise the credibility and effectiveness of the U.S. military and undermine operations, as many analysts believe happened in Iraq and Afghanistan. Improved planning for and management of contractors may not eliminate all problems, but it could mitigate the risks of relying on contractors during overseas operations. DOD acknowledges that it was inadequately prepared to execute large-scale operational contract support in Iraq and Afghanistan. Military commanders and service members have indicated that they were not prepared for the extent of contractor support in Iraq and did not receive enough training to prepare them to manage or work with contractors. Some stated that they did not receive enough exposure to the role of contractors in military operations in the curriculum at professional military educational institutions. An Army commission found that Contracting Officer's Representatives responsible for managing contractors are generally drawn from combat units and receive little, if any, training on how to work with contractors. Many analysts and officials believe that the military did not have enough trained oversight personnel or an adequate infrastructure to effectively execute and manage contractors in Iraq and Afghanistan. In January 2009, Secretary of Defense Robert Gates acknowledged DOD's failure to adequately prepare for the use of contractors when he testified that the use of contractors occurred without any supervision or without any coherent strategy on how we were going to do it and without conscious decisions about what we will allow contractors to do and what we won't allow contractors to do... We have not thought holistically or coherently about our use of contractors, particularly when it comes to combat environments or combat training. DOD acknowledges that there was no comprehensive plan for how to use contractors, and to what extent. As a result, the use of contractors was done on an ad-hoc basis, without significant consideration of implications for foreign policy and without putting in place the necessary oversight. Observers believe insufficient resources were dedicated to oversight, often resulting in poor performance, billions of dollars of waste, and failure to achieve mission goals. The Commission on Wartime Contracting found that, "too often using contractors [was] the default mechanism, driven by considerations other than whether they provide the best solution, and without consideration for the resources needed to manage them." Contract support in operational environments is different, and often more complex, than contract support in peacetime. In peacetime, the goal of contracting is generally to obtain the good or service that is required. The measurements of success are generally getting the right good or service, on schedule, and at a fair price. During operations, however—and particularly in an expeditionary or counterinsurgency environment—cost, schedule, and performance are often secondary to the larger strategic goals of achieving military objectives or denying popular support for the insurgency. For example, in peacetime, the primary purpose of building a road is often to have the road built to specification in the most efficient and least expensive way. Other policy considerations may be factored in (such as small business or environmental concerns), but if the road is built on time, on schedule, and to the required specifications, the contract is usually deemed a success. During operations, however, these may not be the right measures, as other goals may be equally or more important. In a counterinsurgency, winning the support of the local village is often more important than staying on schedule; in responding to a humanitarian crisis, rapidly providing critical supplies may be more important than an increase in cost or meeting some technical specifications. Contract risks can also differ greatly between peacetime and operational environments. Peacetime risks generally include cost overruns, schedule slips, and poor performance. Additional risks must be considered when awarding a contract in an operational environment. As then-Commander, International Security Assistance Force, Afghanistan, General John Allen, stated in his contracting guidance to commanders in Afghanistan, it is important to look beyond cost, schedule, and performance. Evaluate the success of a contract by the degree to which it supports the Afghan people and economy and our campaign objectives. Include operational criteria in decisions to award contracts, such as the effect of the contract on security, local power dynamics, and the enemy. For these reasons, contract support in an operational environment is often far more complex to execute and difficult to evaluate than contract support in peacetime. The goods and services DOD buys during peacetime are very different from those during operations. In FY2012, 49% of all DOD contract obligations were for goods, 41% for services, and 10% for research and development (R&D). By contrast, in Afghanistan, nearly 80% of DOD contract obligations in FY2012 were for services, 16% for goods, and 5% for R&D (See Figure 2 ). Most analysts believe that buying services is more complex than buying goods, adding further complexity to using contractors to support operations.