Defense Acquisitions:

Tailored Approach Needed to Improve Service Acquisition Outcomes

GAO-07-20: Published: Nov 9, 2006. Publicly Released: Nov 9, 2006.

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Department of Defense (DOD) obligations for service contracts rose from $82.3 billion in fiscal year 1996 to $141.2 billion in fiscal year 2005. DOD is becoming increasingly more reliant on the private sector to provide a wide range of services, including those for critical information technology and mission support. DOD must maximize its return on investment and provide the warfighter with needed capabilities and support at the best value for the taxpayer. GAO examined DOD's approach to managing services in order to (1) identify the key factors DOD should emphasize to improve its management of services and (2) assess the extent to which DOD's current approach exhibited these factors.

Several key factors are necessary to improve DOD's service acquisition outcomes--that is, obtaining the right service, at the right price, in the right manner. These factors can be found at both the strategic and the transactional levels and should be used together as a comprehensive, but tailored approach to managing service acquisition outcomes. At the strategic level, key success factors include (1) strong leadership that defines a corporate vision and normative goals; (2) sustained, results-oriented communication and metrics; (3) defined responsibilities and associated support structures; and (4) increased knowledge and focus on spending and data trends. The strategic level also sets the context for the transactional level, where the focus is on making sound decisions on individual transactions. Success factors at this level include having (1) valid and well-defined requirements; (2) properly structured business arrangements; and (3) proactively managed outcomes. DOD's current approach to managing service acquisition has tended to be reactive and has not fully addressed the key factors for success at either the strategic or transactional level. At the strategic level, DOD has yet to set the direction or vision for what it needs, determine how to go about meeting those needs, capture the knowledge to enable more informed decisions, or assess the resources it has to ensure departmentwide goals and objectives are achieved. For example, despite implementing a review structure aimed at increasing insight into service transactions, DOD is not able to determine which or how many transactions have actually been reviewed. The military departments, while having some increased visibility, have only reviewed proposed acquisitions accounting for less than 3 percent of dollars obligated for services in fiscal year 2005 and are in a poor position to regularly identify opportunities to leverage buying power or otherwise change existing practices. Actions at the transactional level continue to focus primarily on awarding contracts and do not always ensure that user needs are translated into well-defined requirements or that post-contract award activities result in expected performance.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The Department agreed that a more coordinated, integrated, and strategic approach to managing service acquisitions was needed. The Director, Defense Procurement and Acquisition Policy, noted that DOD was developing an integrated assessment of how best to acquire services, and expected that this assessment would result in a comprehensive, departmentwide architecture. As part of this architecture, DOD intends to establish multi-functional support capabilities within the military departments that are intended to help users and contracting officers apply best practices, better define their requirements, and identify appropriate performance metrics, among other benefits. GAO reported in June 2013 and in November 2009 that DOD faces challenges in defining requirements and outcome-based measures when acquiring professional and management services. DOD personnel generally expressed task order requirements in terms of a broad range of activities that contractors may perform, but used standards and measures that were not always well-suited to assess outcomes.

    Recommendation: The Secretary of Defense should adopt a proactive approach to managing service acquisition that leverages strategic and transactional elements. Specifically, the Secretary of Defense should ensure that requirements for individual service transactions are based on input from key stakeholders.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: The Department agreed that a more coordinated, integrated, and strategic approach to managing service acquisitions was needed. The Director, Defense Procurement and Acquisition Policy, noted that DOD was developing an integrated assessment of how best to acquire services, and expected that this assessment would result in a comprehensive, departmentwide architecture. As of June 2013, however, DOD has not established a normative position that provides the department's vision as to the volume and type of services that should be acquired in the future, and how such services will be managed from an enterprise-wide perspective. Further, DOD has not established specific goals with metrics to assess whether improvements have been made. In the absence of a clear strategic vision, DOD is not positioned to ensure individual transactions are aligned with strategic goals and objectives.

    Recommendation: The Secretary of Defense should adopt a proactive approach to managing service acquisition that leverages strategic and transactional elements. Specifically, the Secretary of Defense should ensure that decisions on individual transactions are consistent with DOD's strategic goals and objectives.

    Agency Affected: Department of Defense

  3. Status: Closed - Not Implemented

    Comments: The Department agreed that a more coordinated, integrated, and strategic approach to managing service acquisitions was needed. The Director, Defense Procurement and Acquisition Policy, noted that DOD was developing an integrated assessment of how best to acquire services, and expected that this assessment would result in a comprehensive, departmentwide architecture. However, as reported in GAO-13-634 in June 2013, DOD had not yet defined the desired end state for service acquisition or established specific goals to assess service acquisition improvement efforts being implemented, in part due to limitations within DOD's contracting and financial data systems.

    Recommendation: The Secretary of Defense should adopt a proactive approach to managing service acquisition that leverages strategic and transactional elements. Specifically, the Secretary of Defense should on the basis of the above, clearly identify and communicate what service acquisition management improvements are necessary and the goals and timelines for completion.

    Agency Affected: Department of Defense

  4. Status: Closed - Not Implemented

    Comments: The Department agreed that a more coordinated, integrated, and strategic approach to managing service acquisitions was needed. The Director, Defense Procurement and Acquisition Policy, noted that DOD was developing an integrated assessment of how best to acquire services, and expected that this assessment would result in a comprehensive, departmentwide architecture. As of GAO's June 2013 report (GAO-13-634), however, DOD's services acquisition review process continues to focus on transaction-level risks associated with individual service acquisitions such as maximizing competition, rather than determining the areas of risk that are inherent in services acquisition and that should be managed with greater attention.

    Recommendation: The Secretary of Defense should adopt a proactive approach to managing service acquisition that leverages strategic and transactional elements. Specifically, the Secretary of Defense should determine areas of specific risk that are inherent in acquiring services and that should be managed with greater attention (including those areas considered sensitive or undesirable in terms of quantity or performance).

    Agency Affected: Department of Defense

  5. Status: Closed - Not Implemented

    Comments: DOD agreed that a more coordinated, integrated, and strategic approach to managing service acquisitions was needed. The Director, Defense Procurement and Acquisition Policy, noted that DOD was developing an integrated assessment of how best to acquire services, and expected that this assessment would result in a comprehensive, departmentwide architecture. However, as reported in GAO's most recent review of DOD's service acquisition--GAO-13-634, issued in June 2013--DOD has not yet established a normative position that provides the department's vision as to the volume and type of services that should be acquired in the future, and how such services will be managed from an enterprise-wide perspective. The report did note that DOD was in the process of obtaining better data on service acquisitions.

    Recommendation: The Secretary of Defense should adopt a proactive approach to managing service acquisition that leverages strategic and transactional elements. Specifically, the Secretary of Defense should establish a normative position of how and where service acquisition dollars are currently and will be spent (including volume, type, and trends).

    Agency Affected: Department of Defense

  6. Status: Closed - Not Implemented

    Comments: As reported in GAO-13-634 in June 2013, DOD has not defined specific goals or metrics into the cost, schedule, and performance objectives, due in part to limitations in DOD's contract and financial data systems. DOD does not yet have adequate insight into what services it buys, including knowledge of volume, type, locations, and trends of service acquisitions. DOD is in the process of linking contract and financial data systems and increasing the level of detail these systems provide, but does not expect to have the capability of determining spending levels and trends until at least 2014.

    Recommendation: The Secretary of Defense should adopt a proactive approach to managing service acquisition that leverages strategic and transactional elements. Specifically, the Secretary of Defense should provide a capability to determine whether service acquisitions are meeting their cost, schedule, and performance objectives.

    Agency Affected: Department of Defense

 

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