Dempsey: Military Contracting Costs Must Shrink

By Karen Parrish
American Forces Press Service

WASHINGTON, March 6, 2012 – Contracted operational support to the military -- essentially, wartime contracting -- has expanded from a ratio of six troops per contractor during the Revolutionary War to fewer than one service member per contractor in Afghanistan, the chairman of the Joint Chiefs of Staff said today.

Speaking at the fifth annual Joint Operational Contract Support Leaders Conference held at the Women In Military Service for America memorial here, Army Gen. Martin E. Dempsey said “it can’t keep going that way.”

Dempsey said large defense budgets over recent years have contributed to the rise in contracted employee numbers, while the military services also rely on contract support for several logistics and life support functions service members used to perform.

The Center for Strategic and International Studies’ Defense-Industrial Initiatives Group analyzed what DOD spent on contracting from 1990 to 2010. In a report released last May, the group noted defense contract dollars more than doubled from 2001 to 2010.

“Contract spending far outpaced growth in other DOD outlays,” the report noted. “This growth was concentrated in products and services, which experienced a compound annual growth rate of 8.4 percent and 9.4 percent, respectively, compared to the [research and development] category’s 5.4 percent annual growth.”

Now, as the services reshape for waning conflicts and shrinking budgets, there is an opportunity to determine what level of contract support the military needs, the chairman said.

“You can see where the trend line is going,” he said, noting that the trend cannot keep moving in that direction.

Contractors are part of the total military forces, Dempsey said. As with active and reserve component service members, he noted, it’s important to identify both the right number of employees and the essential skills they must have.

“We’re shrinking back to what we can afford” in the number of troops, Dempsey said. The 2013 budget request reduces overall troop numbers 5.5 percent over five years, mostly through cuts to the Army and Marine Corps.

Defense contract spending dollars must shrink as well, the chairman said. He said such cuts must reflect the experience gained over the last decade’s conflicts, so “the body of knowledge we didn’t have [before Afghanistan and Iraq]” won’t be lost in future conflicts.

Dempsey said the Defense Department’s goal should be to use contracted support to provide key options, and to balance the uniformed services’ capabilities, while never forgetting to ask, “What can the nation afford?”

The chairman acknowledged military members need to get better at contract oversight.

There is a broad variety of kinds and costs of contracted support, and often similar tasks are priced far differently, he said.

“There’s no doctrine I’m aware of that would help me make sense of [cost variance],” the general said.

The military must take responsibility for better oversight, and will need “input to close those gaps,” he said.

Dempsey noted defense leaders now accept that even company commanders need the skills to supervise contract support, and the Army, for example, is teaching captains some of those lessons during their branch career courses.

“When resources become scarce, we have to start thinking,” he said. “My message is -- this is an opportunity.”