Army Statement on Contractor Manpower Reporting Project

Army Statement on Contractor Manpower Reporting Pilot Currently the Department of the Army and Department of Defense rely upon factors to estimate contract labor levels from dollar obligations for service/R&D contracts. About 1/3 of the Army's obligation authority is for service/R&D contracts (about $21 billion), and current factors estimated about 231,000 contract manpower equivalents for the Army in a March report to Congress based on that level of expenditure. In recognition of the absence of solid empirical grounding for these factors, the Army initiated a pilot for the Department of Defense in March 2000 to obtain empirical data on contractor labor and costs within the rulemaking process. As of June 2001, about 1,200 contractors reported labor and cost data for about $9.2 billion of service/R&D contracts. Preliminary results from this pilot indicate that the average direct compensation charge per work year within the $9.2 billion sample was about $108,000 per work year, and the average total cost (labor and non-labor, including overhead charges) per work year within the $9.2 billion sample amounted to about $314,000 per work year.

(The average direct compensation charges within the sample include $56,000 per work year for housekeeping services and $140,000 per work year for research and development.)

These results are currently being analyzed and, as a preliminary matter, seem to indicate that using factors to estimate contract labor from given levels of contract expenditures are not a reliable way to estimate contract capabilities. There is too much variation between geographic areas, variability over time, no discernible pattern in the mix of labor and non-labor charges within obligated values, and too many distinct Federal Supply Codes (FSCs) to make sampling representative enough for extrapolating the labor capabilities associated with a given expenditure of contract dollars at a level of fidelity useful for unit-level analysis. For example, the factor for "Medical Services" used in the March report includes the following distinct FSCs included in the current $9.2 Billion sample: general health care services, laboratory testing services, nursing services, anesthesiology services, cardio-vascular services, dentistry services, geriatric services, hematology services, internal medicine services, neurology services, orthopedic services, otolaryngology services, pediatric services, pharmacology services, physical medicine and rehabilitation services, psychiatry services, radiology services, surgery services, medical/psychiatric consultation services, other medical services. Or for another example, the factor for "Utilities and Housekeeping services" in the March report includes the following disparate services included in the $9.2 billion sample: gas services, water services, other utilities, custodial - janitorial services, fire protection services, food services, trash/garbage collection services, guard services, insect and rodent control services, landscaping and grounds keeping services, laundry and dry cleaning services, warehousing and storage services, facilities operations support services, other housekeeping services. The rulemaking that allowed the Army pilot to continue collecting empirical data from contractors was recently terminated based on technical and procedural issues raised by the contracting community. However, in the removal notice in the Federal Register, the Army noted that the requirement for unit level reporting of contract labor data remains. In the short term the Army will analyze the collected data and attempt to get a better handle on the layout of contract dollars in relation to units/functions supported in data calls in support of Total Army Analysis. In the longer term, we anticipate further efforts to address collecting reliable empirical data through the rulemaking process.

PURPOSE of PILOT: The Army was collecting the information to identify and quantify contract support to Army organizations by unit, function and appropriation to improve its manpower allocation and prioritization decisions within the planning, programming and budgeting process, and to facilitate the identification of redundant, inappropriate, or otherwise unnecessary contracted services. Contracted services currently account for at least one third of the Army's obligation authority (about $21 billion) and this share of the Army's budget could substantially increase. The Army further collected this information for purposes of determining and justifying the appropriate, cost-effective mix of contract support, civilian employees and military, within functions and organizations required to maintain readiness and sufficient accountability of Army missions. According to the Army, determining the proper mix of core/in-house and contract support services requires an assessment not only of the nature of the function and missions, and relative overall costs, but also analysis of the amount and quality of in-house expertise and resources required to retain Government core mission area knowledge and oversight capability in certain missions and functions, relative to the size and scope of contract support. The Army believes that mobilization planning also requires an accounting of the numbers of contractor personnel that may be relied on to perform emergency essential functions, or augment logistical support structure in various theaters of operation. According to the Army, such support contractor personnel require force protection; nuclear, biological or chemical protective gear; and other logistical and/or medical support, which must be planned and accounted for. According to the Army, contractor augmentation of force structure is also relevant to measuring readiness and risk for force structure planning purposes and counter threat assessments.
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