GAO sees flaws in Defense service acquisition

GAO Report: High-Level Attention Needed to Transform DOD Services Acquisition

The Defense Department needs significant oversight to ensure service contracts are providing the department with the best services at the best cost, according to a General Accounting Office report released today.

Defense spending on services — ranging from information technology to construction to clerical support to medical care — is approaching $100 billion, but the department lacks the management structure and oversight needed to improve performance and reduce costs, GAO investigators said.

Although acquisitions of $500 million or more are reviewed by their individual agencies, defense officials have no departmentwide evaluation process for improving spending practices, according to GAO's report. DOD and each of the services are developing their own systems to collect and analyze spending data, but the department does not have a plan in place to coordinate the initiatives, the report alleges.

"Greater attention is needed by DOD management to promote a strategic orientation by setting performance goals, including savings goals, and ensuring accountability for achieving them," the report reads.

Defense is the single largest purchaser of services in the federal government, reaching about $93 billion in fiscal 2002. Some members of Congress have argued that DOD often cannot justify its expenses or adequately show where its money is going.

"Responsibility for acquiring services is spread among individual military commands, weapon system program offices, or functional units in various defense organizations with limited visibility at the DOD or military department level," the report read.

Defense officials two years ago started trying to change current practices, but they have not been implemented with the speed and coordination necessary for a significant impact on service acquisition, GAO said.

In its response, DOD said that initiatives such as its business management modernization program demonstrate a commitment to fiscal efficiency. But the department's size and complexity work against it, defense officials said.

"The department cannot adhere strictly to commercial best practices as described in the report," DOD said in its formal response to GAO.