GAO: DOD mismanaging contractors

The Defense Department is increasingly reliant on private contracting, but its overworked acquisitions staff is mismanaging contractors, resulting in lost time and money and shortchanging warfighters’ capabilities, according to the Government Accountability Office.

DOD obligations for contract goods and services totaled about $270 billion in fiscal 2005, an 88 percent increase over fiscal 2000. But only 41 percent of DOD contract obligations in fiscal 2005 were awarded using full and open competitions, GAO Comptroller General David Walker testified Sept. 7 before the House Appropriations Committee’s Defense Subcommittee.

“As overall obligations have increased so has [DOD’s] reliance on the private sector to provide services to fulfill DOD’s mission and support its operations,” he said.

DOD failed to properly oversee contracts by appointing performance monitors in more than a third of the cases studied, GAO found. Also, the department routinely paid award incentives without holding contractors accountable for meeting award goals. DOD paid about $8 billion in award fees regardless of contractor performance in the contracts GAO reviewed.

Furthermore, DOD’s acquisition community has skills gaps and serious succession-planning challenges, Walker said. The size of its acquisition workforce has remained constant despite the growing number and complexity of contracts. Downsizing in the 1990s exacerbated the problem, he added.

The delayed availability of critical technologies is partly responsible for cost overruns, Walker said. DOD looks to revolutionary solutions, which are often immature, resulting in less capability for warfighters, he said.

The department also allows new requirements to be added in the middle of an acquisition cycle, stretching the technologies and creating design challenges, Walker said.

“DOD is counting on these efforts to fundamentally transform military operations,” Walker testified, but transformational programs are the worst offenders. For example, cost estimates for the Future Combat Systems (FCS) program have risen from $82.6 billion to $127.2 billion, a 54 percent increase.

Only one of 51 critical technologies for FCS reached a high level of technical readiness before the program was advanced to the system design and development phase, said Rep. C.W. Bill Young (R-Fla.), the subcommittee’s chairman.

Congress is obliged to examine huge cost overruns, which increased by $45.7 billion between September and December 2005, Young said. Congressional “support is threatened if we cannot justify the large sums we are providing for contracts and procurements,” he added.

Kenneth Krieg, undersecretary of Defense for acquisition, technology and logistics, said creating a 21st-century acquisitions workforce was his No. 1 goal. The department will also speed technology development by linking it with other DOD processes, Krieg testified.

Among those efforts, the department is experimenting with capability portfolios in the areas of joint command and control, network-centric operations, battlespace awareness, and joint logistics. Those initiatives will allow greater coordination in developing technologies and greater awareness for decision-making, Krieg said.