September 19, 2003

Report faults Defense efforts to track contractor work

By George Cahlink
gcahlink@govexec.com

The Defense Department does not precisely track how much work contractors perform at military depots, according to a new General Accounting Office report.

Tracking how much work the Defense depots outsource is critical because federal law prohibits privatization of more than 50 percent of the work done at maintenance centers.

"Continuing weaknesses in DoD's data gathering, reporting processes and financial systems prevented us from determining with precision whether the services were in compliance with the 50-50 requirement for fiscal years 2001 and 2002," concluded the report (GAO-03-1023).

GAO said the services' reporting on 50-50 thresholds are "rough approximations" and not precise estimates. Congress uses that data to judge whether the services are meeting the law.

Defense data submitted for fiscal 2001 and 2002 showed none of the services violated the 50-50 requirement.

However, GAO auditors found each of the services underreported work outsourced to contractors. For example, the Navy did not report $401 million in work on aircraft carrier and on surface ships being placed into inactive status—a figure that would have increased the share of Navy depot work performed by contractors from 42 percent to 46 percent.

GAO recommended that:

• The Pentagon require the military services to use their in-house audit agencies to review the 50-50 data.
• The military services do a better job of ensuring staff are properly trained on reporting requirements.
• The services report 50-50 data once a year, not twice annually, to reduce the burden of data collection.

Defense agreed with GAO's recommendations.

GAO noted it has criticized the data in the past and minor improvements have been made. However, auditors said, major improvements may not be possible because of the burdensome collection process, tight time frames for collecting the data, high staff turnover, inconsistent attention to management and changes in how the services view maintenance operations.