Defense Department Lags in Showing Cost Savings for Civilian and Contractor Workforces

Published: January 13, 2016

CONGRESSDEFENSEIT WorkforceNational Defense Authorization Act

The Department of Defense (DOD) is lagging behind in meeting Congressional requirements in achieving savings in the total funding for civilian and contractor workforces, according to the Government Accountability Office (GAO).

In a recent study, the GAO assessed the DOD’s progress in meeting statutory requirements in the fiscal year (FY) 2013 National Defense Authorization Act (NDAA). Part of the provisions in Section 955 of that NDAA required the DOD to develop and implement a plan to achieve savings in the total funding for civilian and contractor workforces from fiscal years 2012 through 2017. Section 955 also includes a provision that GAO review each of the Section 955 reports DOD submits to Congress to determine whether the required savings are being achieved and whether the plan is being implemented consistently with workforce-management laws.

GAO looked at DOD’s reports from September 2014 and February 2015 to determine the extent to which DOD is meeting the requirements specified in section 955 and whether DOD has achieved the cost savings required under section 955 and identified the savings in these reports.

Key Findings Include

  • DOD’s reports only partially addressed three and did not address another three of the statutory requirements identified in section 955 of the FY 2013 NDAA.
    • DOD partially addressed the requirement to develop and implement a plan for achieving savings by outlining reductions in its civilian and contractor workforces, but DOD does not describe a process for implementing the planned reductions.
    • Rather than addressing planned savings through reductions in the number of military, civilian, and contractor personnel the DOD outlined reductions in full-time equivalent (FTE) positions, which may not equate to savings, and did not outline savings in funding for the contractor workforce beyond fiscal year 2015.
  • DOD reports having made civilian personnel reductions, but the reductions may not achieve the savings required by section 955, and DOD has not provided an explanation of the reasons for the projected shortfall in achieved savings in the contractor workforce.
  • DOD reported reductions to civilian FTEs, but does not report the savings associated with civilian personnel reductions, clouding the waters. From FY 2012 through 2016, GAO found that DOD civilian FTEs declined by 3.3 percent, but civilian personnel costs declined by only 0.9 percent, adjusted for inflation.


GAO notes that in its FY 2016 budget, DOD shows a planned increase in spending on the contractor workforce that, if implemented, will mean that about half the reduction to contractor workforce spending that DOD has identified as its goal through fiscal 2017 remains yet to be achieved. Further, GAO says that DOD would need to reduce its spending on the contractor workforce by about $4.1 billion from FY 2012 through fiscal year 2017 in order to match the approximately 7.0 percent reduction in military average strength over the same period. The matched reduction is required by the FY 2013 NDAA. That $4.1 billion averages to about $684 million in reductions each year, but given DOD’s apparent lag in keeping pace it may mean challenges ahead for FYs 2016 and 2017 unless DOD can renegotiate the pace with Congressional leaders in a future NDAA.