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1 1 (December 17, 2021)

handle is hein.crs/govegtc0001 and id is 1 raw text is: Con gres iona& Resear 11 Service Informing the legislitive debate since 1914 Updated December 17, 2021 Defense Primer: Department of Defense Contractors Throughout its history, the Department of Defense (DOD) has relied on contractors to support a wide range of military operations. A defense contractor, as defined by the Code of Federal Regulations, is any individual, firm, corporation, partnership, association, or other legal non-Federal entity that enters into a contract directly with the DOD to furnish services, supplies, or construction (see 32 C.F.R. 158.3, Definitions). Within the defense policy community, the term contractor is commonly used in two different contexts. The word can describe the private companies with which DOD contracts to provide goods and services. It can also describe individuals hired by DOD-usually through private companies, which are also considered contractors in the previous context-to perform specific tasks. The term contractor does not refer to military servicemembers, civilian DOD career employees, or civilian political appointees. Operations over the past 30 years have highlighted the central role that contractors play in supporting U.S. troops, both in terms of the number of contractors and the type of work being performed. During recent U.S. military operations in Iraq and Afghanistan, contractors frequently accounted for 50% or more of the total DOD presence in- country. Contractors as Companies In Fiscal Year (FY) 2020, DOD obligated more money on federal contracts ($420 billion in current dollars) than all other government agencies combined. While DOD contracts with many companies for all kinds of goods and services, its contract activities are dominated by five companies: Lockheed Martin, Boeing, Raytheon, General Dynamics, and Northrop Grumman (see Table 1). In FY2020, these companies together received 54% of all of DOD's contract obligations for the year. These five companies are often referred to as the primes, signifying their frequent role as prime contractors who in turn subcontract to other companies. Table I. Five Largest DOD Contractors by Obligations, FY2020 in billions of current dollars Contracted Company Dollars Lockheed Martin Corporation $75.2 The Boeing Company $27.4 General Dynamics Corporation $21.8 Raytheon Company $21.7 Northrop Grumman Corporation $12.3 Source: beta.SAM.gov Top 100 Contractors Report, FY2020. Note: Fifty percent of the Bell-Boeing Joint Project Office is attributed to the Boeing Company. In FY2020, 51% of total DOD contract obligations were for services, 41% for goods, and 8% for research and development (R&D). Contractors as ivid uals Individual DOD contractors fulfill a wide variety of organizational roles and functions from logistics and transportation to intelligence analysis and private security. Why Does DOD Use Individual Contractors? Following the conclusion of the Cold War, the U.S. military-in line with a government-wide trend-embraced outsourcing, increasing reliance on contractors instead of using military servicemembers or government civilians to perform certain tasks. Some analysts have highlighted numerous benefits of using contractors. These benefits include freeing up uniformed personnel to focus on military specific activities; providing supplemental expertise in specialized fields, such as linguistics or weapon systems maintenance; and providing a surge capability to quickly deliver critical support functions tailored to specific military needs. Because a contractor can be hired when a particular need arises and released when his or her services are no longer needed, some have argued that meeting immediate personnel needs through surges in the use of contractors by the federal government is more cost-effective on a long-term basis. Just as the effective use of contractors can augment military capabilities, the ineffective use of contractors can prevent troops from receiving what they need, when they need it, and can lead to wasteful spending. Contractors can also compromise the credibility and effectiveness of the U.S. military and undermine operations, as many analysts believe occurred during operations in Iraq and Afghanistan. How Many Contractors Does DOD Employ? DOD's Inventory of Contracted Services (ICS, see 10 U.S.C. §2330a(c)) is a required annual report to Congress that provides information on certain categories of contractor hiring by individual DOD components (e.g., the military departments and defense agencies). Under 10 U.S.C. §2330a, DOD is required to collect and report data for each purchase of services in excess of $3 million within four service acquisition portfolio groups: logistics management services, equipment related services, knowledge-based services, and electronics and communications services. In the report, DOD must also provide the number of contractor employees associated with these services. The report historically has not included a total number of individual contractors-instead, it has provided an estimate of contractor full-time equivalents (FTEs) for direct labor, a measure referring to the estimated numbers of man-hours contracted. According to the FY2017 ICS report, the most recent available report with

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