Defense Department file photo

Pentagon Gets a Better Grip on Spending for Services Contracts

GAO recommends further improvements to help balance civilian and outside workforces.

Defense Department managers in fiscal 2013 came in $500 million under spending limits on contract services required by the 2012 National Defense Authorization Act, a watchdog found, an improvement over the previous year, when departmental caps were exceeded by $1.72 billion.

But more precision and consistency in multi-year data are needed to “budget and manage contract services spending,” the Government Accountability Office reported on Thursday. Of all Pentagon components, only the Army broke the limits on the services contracts that the congressional Armed Services committees determined were needed to maintain the proper balance between the civilian and contract workforces.

The Army, auditors found, exceeded its spending target “due to inaccurate budget estimates and weaknesses in planning by not soliciting inputs on commands' contract services spending plans.”

The larger department, in spending $170 billion on services contracts in fiscal 2013, “has not fully implemented the steps necessary to effectively manage the Section 808 limitations on contract services required by law,” GAO wrote. “By inconsistently excluding categories of services and overestimating the allowable spending, DoD did not accurately measure compliance with contract services spending limits.”

Though the Air Force implementation of improved fiscal controls helped the department better manage contract services spending in fiscal 2013, a “wider use of effective fiscal controls by all defense components could help DoD realize intended efficiencies and effective management of contract services spending,” auditors said.

The Defense Department has updated its guidance for data gathering, but changes in methodology mean that the results will not be available until 2015, after the statutory requirement has expired, GAO found.

The watchdog recommended that Congress consider extending the time period for Defense’s implementation of funding reductions in select contract functions and that the Pentagon improve “improve planning and consistently implement fiscal controls to better manage contract services.” Pentagon officials agreed.

The Pentagon’s ability to track its use of services contractors has been criticized as wasteful by the nonprofit Project on Government Oversight, which last month sent Defense Secretary Chuck Hagel a letter demanding more-accurate inventories.