DoD’s inability to inventory its contracted services accurately means too many contractors are still performing inherently governmental work, according to a General Accountability Office (GAO) report.  GAO has consistently contended that relying on contractors to support core missions "can place DoD at risk of contractors performing inherently governmental functions.”

This is the second of three annual reviews GAO is undertaking to determine how DoD is complying with a congressional mandate to use inventories of contracted services to determine how many contractors DoD employs and whether they are performing appropriate work.  The report acknowledges that DoD has improved to its process to inventory service contractors and their work, but states the department has to do much more to ensure that it fully complies with congressional direction. 

GAO evaluated the results of each military department’s review of their FY 2009 contractor services inventories.  As a result, GAO determined that too many Army and Air Force contractors continue to perform functions the services called “inherently governmental.”  GAO, which has criticized DoD in the past for lack of definitive guidelines and documentation in this area, attributes this situation to “the absence of guidance that provided for clear lines of responsibility.” 

The Army argues that the DOD hiring freeze and problems caused by the insourcing process has made it difficult for them to resolve issues highlighted during their inventory reviews.  However, GAO disagrees that this justifies using contractors to continue to perform inherently governmental functions.

GAO alleges that the Navy was unable to confirm that their commands had actually conducted the mandated reviews.  This lapse, says GAO, “underscores the need for greater accountability and management attention.”

GAO notes significant problems with the primary system used to collect data on contract services provided to DoD.  The Federal Procurement System-Next Generation (FPDS-NG), according to the GAO study, identifies only one type of service for each contract action, does not include the number of full-time equivalent contract personnel, and does not identify the requiring activity.  These inadequacies limit the “utility, accuracy, and completeness of the inventory data,” GAO contends. 

DoD acknowledges these limitations and has sent Congress its plan to collect contractor manpower data.  But, the GAO report notes that DoD cautions that “developing a common data system to collect and house these data would be challenging given the different requirements from the military departments and components” and therefore doesn’t expect to have results until 2016.  GAO is skeptical of the effectiveness of the plan because it “does not establish milestones or specify how it will meet the legislative requirement.”

In its report, GAO includes recommendations for improving DoD’s process to inventory contracted services.  To address continued use of contractors to perform inherently governmental functions, GAO recommends the secretaries of the Army and the Air Force review the instances of such activity identified in the GAO report and take corrective action.  DoD told GAO it would work with the Army and Air Force to ensure action is taken.

GAO also recommends that the Military Departments and defense components develop guidance that “provides clear lines of authority, responsibility, and accountability for conducting an inventory review.”  DoD generally agrees, but argues that due to the variation in the size and mission of its components necessitates that specific guidance should be provided by each component head.