Service contracting at the Defense Department has soared over the last few years, leading to worries that some contractors may be performing work deemed inherently governmental.

In 2008, Congress mandated the Pentagon to keep an inventory of service contracts and review it annually to make sure government work wasn’t being improperly outsourced.

But the Government Accountability Office, in a recent report, found a lack of guidance from the top has led to challenges in implementing that requirement.

Tim DiNapoli, the acting director of the GAO’s Acquisition and Sourcing Management team, told In Depth with Francis Rose DoD faces two issues, which threaten to become stumbling blocks in the Pentagon’s efforts to comply with the law.

First, is how DoD actually compiles its inventory, DiNapoli said. DoD mostly uses the Federal Procurement Data System to keep track of its service contracts. But GAO found that system is not entirely sufficient for the department’s purposes.

The Army, on the other hand, used its Contractor Manpower Reporting Application to document service contract work. Unlike the FPDS system, the Army’s system houses data at the contract line-item level, GAO noted.

No clear lines of authority

The other issue is a lack of official guidance for how to analyze or respond to information collected in the inventory that shows inherently governmental work being performed by a contractor.

“When the department reviews the inventory to determine whether contractors are, in fact, performing inherently governmental functions, there was a lack of guidance that provided for clear lines of authority, responsibility and accountability,” DiNapoli said.

In fact, he added, in eight of the 12 cases GAO examined, contractors continued to perform work identified by the services as inherently governmental.

The debate over what functions of the Pentagon are inherently governmental has vexed DoD leaders for some time.

“Determining what is and what isn’t inherently governmental or what’s closely associated with inherently governmental … has been challenging,” DiNapoli said. “It’s not something that’s black and white in many cases, and it’s a judgment call.”

But that’s been compounded by a lack of official guidance for how to review the inventories of service contracts. The lack of clear guidance has even led to a breakdown in compliance with the law.

DiNapoli said the Navy, for example, could provide “no assurance” that its various commands had even conducted their individual reviews at all.

GAO interviewed officials at three Navy commands that hadn’t conducted the inventory review, DiNapoli said, and found that either the commands didn’t know about the requirement or simply ignored it.

“That, to us, shows a complete lack of internal controls and accountability, which again is why our recommendation says: We need to have guidance out there that provides for that kind of clear line authority and responsibility,” he said.

GAO recommended that the defense secretary provide more specific guidance to the services for conducting inventories. While the Pentagon did issue a directive in December 2011 requiring military departments to certify that they’ve conducted the service-contract inventory, it fails to “clearly establish lines of accountability … for conducting the inventory reviews and addressing instances where contractors are identified as performing inherently governmental functions,” GAO noted in its report.

In its official response, DoD largely agreed with the agency’s recommendations.

This story is part of Federal News Radio’s daily DoD Report brought to you by United Health Military and Veterans Services. For more defense news, click here.

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