Over the last five years, the Department of Defense (DoD) consistently obligated more money on the acquisition of services than products. These obligations are significant.
For example, in 2014 alone, DoD obligated $85 billion on its three largest types of services — knowledge-based, research and development, and facility-related services. This amount was more than double the amount DoD obligated for aircraft, land vehicles and ships, the three largest product categories DoD acquired.
In 2014, DoD obligated over $156 billion to contractors that provide services, such as for engineering support, to meet needs. These contracted services constituted more than half of DoD’s total contract spending. Because of the dramatic growth in service contract spending, the Government Accounting Office (GAO) recently evaluated DoD’s management of contracted services.
The GAO found that units within DoD are collecting data on, and forecasting the future need for, service contracts in an inconsistent fashion. In addition, GAO found that DoD’s budget exhibits on contract services provide limited visibility to Congress on planned spending, and the primary exhibit for contracted services does not meet current statutory reporting requirements.
GAO is recommending that Congress consider amending reporting requirements to include estimated spending on services beyond the budget year. GAO also recommends that the Secretary of Defense and military departments revise program objective memorandum (POM) guidance, coordinate efforts to forecast services, and fully comply with budget reporting. DoD has concurred with the budget reporting recommendation and partially concurred with the two others, citing challenges with estimating future spending, but has not addressed the issues of revised guidance or coordination.
The full text of GAO’s report can be seen at: http://www.gao.gov/assets/680/675276.pdf
