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1 [1] (June 6, 2024)

handle is hein.crs/govepub0001 and id is 1 raw text is: 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. Within the defense policy community, the term contractor is commonly used in two different contexts. The word can describe the private companies, academic institutions, and other entities with which DOD contracts to provide supplies, construction services, or other types of 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. Congress has exercised its legislative powers in the past to establish certain reporting requirements regarding DOD contractors, and exercised oversight of DOD contractor activities. Contractors as Entities In Fiscal Year (FY) 2022, DOD obligated more money on federal contracts ($415 billion in current dollars) than all other government agencies combined spent on contracts. While DOD contracts with many entities, five companies (Boeing, General Dynamics, Lockheed Martin, Northrup Grumman, and Raytheon) typically received a majority of departmental contract obligations each fiscal year (see Table 1). These companies frequently serve as prime contractors, or primes, a company that maintains a direct contractual relationship with the government. Primes in turn subcontract to other companies that serve as subprime contractors, or subprimes. For FY2022, another top recipient of DOD contract funding was Pfizer Inc., with which DOD has contracts to obtain antiviral oral therapeutics and mRNA vaccines used to treat and prevent COVID-19. Some of these contracts were executed in partnership with the Department of Health and Human Services (HHS) as part of the national emergency response to COVID-19. Table I. Six Largest DOD Contractors by Obligations, FY2022 (in billions of current dollars) Company Obligations Lockheed Martin Corporation $46.2 Raytheon Technologies Corporation $26.1 General Dynamics Corporation $21.6 Pfizer Inc. $16.7 The Boeing Company $14.8 Northrop Grumman Corporation $13.8 Source: SAM.gov Top 100 Contractors Report, FY2022. Notes: Fifty percent of the Bell-Boeing joint Project Office is attributed to The Boeing Company. Raytheon is now known as RTX Corporation. Updated June 6, 2024 In FY2022, 49% of total DOD contract obligations were for services and 51% of DOD contract obligations were for goods, or products. Contractors as Indivdua s Individual DOD contractors fulfill a wide variety of organizational roles and functions, from logistics and transportation to intelligence analysis and private security. Reasons for DOD Using Individual Contractors After 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. Proponents of this trend note that effective use of contractors helps DOD by 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. They note that meeting immediate personnel needs through surges in contractor use by the federal government is more cost-effective on a long- term basis than adding staff. Critics of the trend counter that ineffective management and oversight of contractors can lead to wasteful spending of taxpayer dollars and impeded operational outcomes. Some critics point out that contractors can also compromise the credibility and effectiveness of the U.S. military and undermine operations, pointing to certain operations in Iraq and Afghanistan. Tracking Numbers of Contractors DOD Employs DOD's Inventory of Contracted Services (ICS, see 10 U.S.C. §4505(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. §4505, DOD is required to collect and report data to Congress 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. These data are to be collected in a manner comparable to the manpower data elements used in inventories of similar DOD civilian employee functions. After the data have been collected, relevant DOD agencies must provide a review that includes ensuring that the contracting activities in the report do not include any governmental functions, and identify potential contracting activity that could be converted to civilian employee performance. These reports combine contract data DOD contracting officials routinely enter into the Federal Procurement Data System (FPDS) with data contractors report annually to the government. Contractor-supplied data include the total

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