Army Statement on Contractor Manpower Reporting Project

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. 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.