Is the Pentagon Wasting Billions on a Tracking System for Its Contractors?

As the Defense Department scurries to keep up with ISIS and other changing threats from overseas, its systems for tracking spending on a variety of contractor services has drawn criticism from independent auditors and accusations of illegality from a good-government advocacy nonprofit.

The Project on Government Oversight on Nov. 25 sent Defense Secretary Chuck Hagel a harsh letter warning of “actions within your office that are greatly hindering efforts to bring service contract spending under control.”

Arguing that Defense spends more on service contractors than on civilian and military personnel with “only a fraction of the scrutiny,” POGO accused the Office of the Undersecretary of Defense for Personnel and Readiness of “concerted efforts” to “willfully breach laws and congressional mandates to implement an improved service contracting tracking system.”

POGO charged that billions of dollars are being spent unnecessarily because of a failure to assemble data on service contracting by fully adopting the Enterprise-wide Contractor Manpower Reporting Application, modeled after the Army’s system, and to adequately staff the department’s Total Force Management Support Office.

“POGO has reason to believe that this is being done at the urging of the service contractors themselves,” said the letter, which was copied to top Pentagon officers and members of Congress. It asked Hagel to investigate whether “components are contracting out inherently governmental functions” that should be performed by civilian personnel and whether false statements have been made to Congress and auditors and oversight staff.

Much of the letter was based on a Nov. 19 Government Accountability Office report, which found that some of the service branches had delivered incomplete inventories of their service contracting. “Components may not have fully identified all instances in which contractors were providing services that are closely associated with inherently governmental functions, a key review objective to help ensure that the DoD is not overly reliant on contractors to support core missions,” GAO wrote. “A key factor hindering the components' inventory reviews is the lack of accurate and reliable data” as the department performs strategic workforce planning and related budgeting.

The GAO report “raises a question of whether DoD will continue to implement a common data system modeled after the Army's system or attempt to develop a new system,” auditors wrote. “DoD continues to lack a plan with timeframes and milestones to measure its progress toward implementing a common data system.”

A Pentagon spokesman declined to comment on the POGO letter to Hagel.

Lawrence Prosen, a law partner at Thompson Hine in Washington who focuses on government contracts, told Government Executivehe was “surprised at POGO’s vitriol alleging misconduct and corruption.” The group is taking “a where-there’s-smoke-there’s fire” approach,” but Defense is actually “stuck in the middle,” he said. He noted that the department is working on the problem, having proposed modifying the Defense Federal Acquisition Regulation to put the burden on contractors to supply key data.

“DoD needs to coordinate the different branches’ systems,” Prosen said, “and has to be much more reactionary in these times the way warfare is now,” which is different from building tanks and aircraft. A few months ago no one had heard of ISIS, he noted, and the Pentagon has sudden need for experts in, say, international law, but “it has its own people retiring with the baby-boomers and it has to be able to get knowledgeable experienced people.”

Having read the GAO report, Prosen said, he doesn’t see the “nefariousness” that POGO indicates.